Truck Leasing Problem
Winnie Cheng
ESE 204
Truck Leasing Strategy
Reep Construction recently won a contract for the excavation and site preparation of a new rest area on the Pennsylvania Turnpike. The main problem is that the firm wants to minimize cost of meeting the monthly trucking requirements for this project but also follows a no-layoff policy.
The constraints of the problem are as follows:
The job requires four months to complete, with 10, 12, 14 and 8 trucks needed in months 1 through 4, respectively.
The firm signed a long-term lease with PennState Leasing last year for trucks where one of these trucks will be available for use on the new project in month 1, two for month 2, three for month 3 and one for month 4. The long-term leasing contract has a monthly cost of $600 per truck. Reep construction pays its truck drivers $20 an hour and daily fuel costs are also approximately $100 per truck, which leads to a monthly cost of about $2000 since each truck used on the new project will be operating approximately eight hours a day, five days a week for four weeks a month.
PennState Leasing also offers a short-term lease that includes the cost of both a truck and a driver, where a short-term lease of one month costs $4000, of two months costs $3700, three months costs $3225 and four months costs $3040.
The decision variables in this problem can be divided into two categories: the number of trucks obtained through long-term leasing and the number of trucks obtained through short-term leasing.
For the trucks obtained through long-term leasing, there is a set number of trucks that can be used for each respective month stated earlier in the constraints.
Thus let L1=# long-term leased trucks in month 1
L2=# long-term leased trucks in month 2
L3=# long-term leased trucks in month 3
L4=# long-term leased trucks in month 4
For the trucks obtained through short-term leasing, there are more options. A truck’s lease can start in any of the four months
ESE 204
Truck Leasing Strategy
Reep Construction recently won a contract for the excavation and site preparation of a new rest area on the Pennsylvania Turnpike. The main problem is that the firm wants to minimize cost of meeting the monthly trucking requirements for this project but also follows a no-layoff policy.
The constraints of the problem are as follows:
The job requires four months to complete, with 10, 12, 14 and 8 trucks needed in months 1 through 4, respectively.
The firm signed a long-term lease with PennState Leasing last year for trucks where one of these trucks will be available for use on the new project in month 1, two for month 2, three for month 3 and one for month 4. The long-term leasing contract has a monthly cost of $600 per truck. Reep construction pays its truck drivers $20 an hour and daily fuel costs are also approximately $100 per truck, which leads to a monthly cost of about $2000 since each truck used on the new project will be operating approximately eight hours a day, five days a week for four weeks a month.
PennState Leasing also offers a short-term lease that includes the cost of both a truck and a driver, where a short-term lease of one month costs $4000, of two months costs $3700, three months costs $3225 and four months costs $3040.
The decision variables in this problem can be divided into two categories: the number of trucks obtained through long-term leasing and the number of trucks obtained through short-term leasing.
For the trucks obtained through long-term leasing, there is a set number of trucks that can be used for each respective month stated earlier in the constraints.
Thus let L1=# long-term leased trucks in month 1
L2=# long-term leased trucks in month 2
L3=# long-term leased trucks in month 3
L4=# long-term leased trucks in month 4
For the trucks obtained through short-term leasing, there are more options. A truck’s lease can start in any of the four months