Production and Cost Analysis Please read this article and answer the questions keeping in mind the information we have covered in the textbook: Fundamentals of Managerial Economics by Mark Hirschey (at least a good paragraph for each question) Article #1: Supersizing Hits Freight World By JENNIFER LEVITZ AUGUST 15, 2010, The Wall Street Journal When Kraft Foods Inc. packs trucks with weighty items such as jars of Miracle Whip and pouches of Capri Sun juice, 40% of the rigs must leave the loading dock partly empty to avoid exceeding federal truck weight limits. Kraft says those rules force it and others to make extra trips and spend more on fuel. Now, the Illinois food giant is part of a coalition of 150 companies lobbying Congress to allow trucks that are 20% heavier on U. S. highways. Supporters of the idea say truckers could pay an extra fee to offset road repairs. Some 19 Western governors wants Congress to allow for more giant trailers, like this “triple” tractor trailer. There is an arms race of sorts in the shipping industry—and it is prompting a backlash. Efforts are under way to supersize trucks, trains, and cargo ships as freight haulers look to move more goods in fewer trips. Driving the trend are rising fuel costs, an emphasis on reducing carbon footprints and capacity constraints created during the recession as freight movers scaled down, said Paul Bingham, managing director of transportation markets for the research firm IHS Global Insights. Road-safety officials say rigs are big enough now. “It’s insane,” said Deputy Chris Rizzo, a truck inspector for Loudon County, Va. , of efforts to increase the weight limits set by Congress in 1974. “I can actually feel bridges bouncing up and down” when trucks go over them, he said. The heavier the truck, the more the bridge bounces. ” Earlier this year, California safety regulators were alarmed when a record-setting, 3. 4-mile train—two to three times the length of a typical freight train—rolled through Southern California. Witnesses dubbed it “the monster train” and posted videos online. It turned out to be a test by Union Pacific Corp. , which increased the length of its intermodal trains 15% in the first quarter, and was experimenting with an even longer train. Richard Clark, director of safety for the California Public Utilities Commission, said there was no otice of the experimental train, and the agency didn’t realize it would be that long. “We were surprised,” he said. Longer trains raise concerns about blocked rail crossings, especially when emergency vehicles need to cross tracks, and about whether trains can safely make turns, he said. A Union Pacific spokesman said the company did make required federal notifications but “in hindsight, we probably should have made the courtesy call” to state agencies also. Union Pacific said the ultra-long train was a one-time test. But in an April earnings conference call, a company official said Union Pacific believes it can increase its average train length by another 10% to 15% in an effort to reduce fuel use and emissions as well as wear and tear on its tracks.
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