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# Quantitative Methods

This is one problem. I need to know if the question is an accounting, break-even analysis, or simulation problem and why or why not. Please answer all the questions.

We manufacture refrigerators in Nashville, TN. The petroleum crisis has raised the price of gasoline to \$3.75 for regular and diesel to \$4.35 per gallon. In January, they were \$3.00 and \$3.50 respectively. Diesel engines get about 30% better mileage than gasoline engines. We are considering acquiring and running our own trucks to deliver our refrigerators to the wholesalers in the future.
1. What factors should we consider in evaluating the cost of this option over the next year?
2. How do they affect the overall cost of shipping our refrigerators?
3. Is this a breakeven question? Why or Why not?
4. Is this an accounting question? Why or Why not?
5. Is it a forecasting question?Why or why not?
6. Is it a simulation question?Why or why not?
7. Is it an optimization question? Why or why not?
8. Which approach would you recommend? Why or why not?
9. List all the factors and calculations appropriate to your recommended approach.
We manufacture refrigerators in Nashville, TN. The petroleum crisis has raised the price of gasoline to \$3.75 for regular and diesel to \$4.35 per gallon. In January, they were \$3.00 and \$3.50 respectively. Diesel engines get about 30% better mileage than gasoline engines. We are considering acquiring and running our own trucks to deliver our refrigerators to the wholesalers in the future.
1. What factors should we consider in evaluating the cost of this option over the next year?
2. How do they affect the overall cost of shipping our refrigerators?
3. Is this a breakeven question? Why or Why not?
4. Is this an accounting question? Why or Why not?
5. Is it a forecasting question?Why or why not?
6. Is it a simulation question?Why or why not?
7. Is it an optimization question? Why or why not?
8. Which approach would you recommend? Why or why not?
9. List all the factors and calculations appropriate to your recommended approach.

#### Solution Preview

Week 7
We manufacture refrigerators in Nashville, TN. The petroleum crisis has raised the price of gasoline to \$3.75 for regular and diesel to \$4.35 per gallon. In January, they were \$3.00 and \$3.50 respectively. Diesel engines get about 30% better mileage than gasoline engines. We are considering acquiring and running our own trucks to deliver our refrigerators to the wholesalers in the future.
1. What factors should we consider in evaluating the cost of this option over the next year?
Factors:
o Fixed Cost of Diesel Trucks
o Fixed Cost of Petroleum Trucks
o Annual Miles to be driven to deliver all the refrigerators
2. How do they affect the overall cost of shipping our refrigerators?
o Fixed Cost of Diesel Trucks
If the fixed cost is too low, it may be able to offset the additional expenses ...

#### Solution Summary

The expert examines the quantitative methods to manufacture refrigerators in Nashville.

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