current ship capacity is 15K containers and the new ship capacity is 24K containers. We know doubling ship capacity will increase fuel costs by 40%. what are the new fuel costs if the old ship’s fuel cost was $4.5M
how did they get $5.6M as the new fuel cost?
Hi!
I would follow this reasoning:
- an increase of 15k in capacity (from 15k to 30k, which is the double) leads to an increase of 1.8M in costs (from 4.5M to 6.3M). An increase of only 9k (from 15k to 24k) how much would increase the costs?
- you can set up the following proportion, where x is the unknown variable representing the cost increase:
15k : 1,8M = 9k : x
x = (1.8M*9k)/15k = 1.08M
- in sum, bringing the capacity up to 24k (+9k from 15k) would bring the costs up by 1.08M, with new costs totaling 4.5M + 1.08M = 5.56M, which can be approximated with 5.6M
Hope this helps!
Hi there,
For questions like these, I always recommend thinking through what the equation looks like!
Alternatively, try to logic your way through this.
“Doubling” essentially means a 100% increase. So, for every 1% increase in capacity, we will have .018M increase in costs (.004 times $4.5M).
Since we're increasing capacity by 60% (9k divided by 15k), we know that costs have gone up by 1.08M (60 times .018M(
15kTEU to 24kTEU is a 60% increase in capacity
100% increase in capacity will lead to 40% increase in costs
1% increase in capacity will lead to 0.4% increase in costs
60% increase in capacity will lead to 24% increase in costs
4.5M cost will go up to 5.58M
