Managerial Economics Calculus Question?

Posted on 2014-04-16 12:00:00 in Economics by ANDREAS

Hi,



I hope some of you can help me with this question for my Managerial Economics Exam.



Let us assume that you have employees transporting cargo and you as a manager want to reduce the TC of transportation.



Studies have shown that the slower you drive, the less fuel you are using. This means you will reduce fuel costs.



However the slower you drive, you have to pay your employees more in wages because they are spending more time on each route.



In the given examples we are given this example.



For each 1000 kilometers your employee drives this is their usage:



Fuel usage in liters: 504, 420, 336, 252 and corresponding time usage in hours: 10, 12, 15 , 20



Example: You spend 504 liters of fuel if you drive for 10 hours(a route of 1000 KM). If you spend 420 liters you have driven for 12 hours(also a route of 1000 KM) etc.



One liter of fuel costs 12,00 credits

One hour of wage to the employee costs 240 credits.



HOW can I determine the OPTIMAL driving speed

and

HOW can I determine a function that shows the total cost for each 1000 KM that you drive as a function of the driving speed.



I hope you understand my question. It is quite difficult to translate from my native language. :-)

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