| Economic-engineering cost data and a simulation model were used to analyze the impact of sales density, size of sales area, sales volume, and equipment configuration on costs of bulk fuel delivery by cooperatives. Fixed costs accounted for the majority of delivery costs regardless of sales density or size of sales area, at least for the relevant range of these variables for North Dakota. Increasing the radius of a sales area from 5 to 50 miles increased average costs only $.02 to $.09/gal. Doubling sales by either doubling the size of the sales area or the sales density reduced average total costs by nearly 50%. Thus, cooperatives with excess delivery capacity could achieve significant savings if they consolidate to operate closer to the capacity of... |
