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F. Naz
F. Naz, B.Com
Category: Multiple Problems
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Experience:  have completed B.Com and CA Finalist
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The Houston Port Authority has engaged you as a consult¬ant

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The Houston Port Authority has engaged you as a consult¬ant to advise it on possible changes in the handling of wheat exports. At present, a crew of dockworkers using conventional belt conveyors unloads hopper cars contain¬ing wheat into cargo ships bound overseas. The crew is known to take an average of 30 minutes to unload a car. The crew is paid a total wage of $50 per hour. Hopper car arrivals have averaged 12 per 8-hour shift. The railroad as¬sesses a demurrage charge from time of arrival to release at a rate of $20 per hour on rolling stock not in service. Par¬tially unloaded cars from one shift are first in line for the fol¬lowing shift.


A chi-square "goodness-of-fit" analysis of arrival rates for the past months indicates a Poisson distribution. Data on unloading times for this period may be assumed to follow a negative exponential distribution. Because of excessive demurrage charges, adding an¬other work crew has been proposed. A visit to the work area indicates that both crews will be unable to work together on the same car because of congestion; however, two cars may be unloaded simultaneously with one crew per car. During your deliberations, the industrial engineering staff reports that a pneumatic handling system has become available. This system can transfer wheat from cars to cargo ships at a constant rate of three cars per hour, 24 hours per day, with the assistance of a skilled operator earning $20 per hour. Such a system would cost $400,000 installed. The Port Authority uses a 10 percent discount rate for capital im¬provement projects. The port is in operation 24 hours per day, 365 days per year. For this analysis, assume a 10-year planning horizon, and prepare a recommendation for the Port Authority.


In your report, evaluate each of the three alternatives (continue operating with one crew; add an additional work crew; or purchase a pneumatic handling system). Determine the cost of service for each alternative and describe the model you would use in each instance.


Hint: Look at pay back period.

Jawaad Ahmed :

By wht time do you need the answer thanks.


Unfortunately it has to be turned in, in class at 6:30pmCST Wednesday the 9th.

Jawaad Ahmed :

How many hours are remaining from now, thanks.


from this moment 18 hours.

Jawaad Ahmed :

Okay will try my best to answer in next 15 to 18 hours, thanks.

Customer: At this moment it is now just under 15.5hrs
Jawaad Ahmed :


Customer: replied 3 years ago.
Appreciate your help sir. :-)
have a nice day

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Customer: replied 3 years ago.

This solution, it uses the Poisson Distribution correct? Because it is a case on the topic on Process Flow/Waiting Lines, Chapter 10 of Operations & Supply Chain Management Text 14th Edition. It is not on Financial Management like my other questions usually are.

You can see that the evluation has to be done and at the bottom, the payback period is written therefore the evaluation has been done using the payback period and NPV, thanks.

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