You have just been hired as the assistant manager of the newly formed Palouse Partners Cooperative (PPC). The PPC is starting off small with farmer members throughout the greater Palouse region. PPC's farms are located in Harrington, St. John, Uniontown, Sprague, Pullman, Farmington, Tekoa, Medical Lake, and LaCrosse. Each farming community will have 3,000 acres of wheat ready for harvest in August (roughly three farms each).
The PPC has September wheat orders for international customers that are served out of the Port of Portland and the Port of Seattle. Customers served out of the Port of Portland have placed an order for 24,000 tons of wheat that is received by barges moving downstream on the Columbia-Snake system.The PPC has a contract that allows them access to the Port of Lewiston's barge loading facility and related assets for storage. The PPC has reserved sufficient number of barges that will be ready to load at harvest.
Meanwhile, those served by the Port of Seattle have an order for 17,000 tons. The Port of Seattle receives wheat via rail lines. The PPC has rail loading facilities located in Cheney and Oakesdale Washington, and has contracted with BNSF to have 200 rail cars ready for grain loading in September. The cars can be delivered to either site. Each loading facility has the capacity to load up to one full unit train (110 rail cars), but must load at least 50 rail cars.
Your job as assistant manager is to identify which farms will supply each market in order to minimize the transportation costs. In talking with your supervisors and others who have been working in the industry for some time now, you have already generated estimated for your ton-mile transport costs by truck to be 26.6 cents by truck, 2.24 cents by rail, and .72 cents by barge. However there are many other variables at play in your decision that you must go out and identify or estimate.
You have been given until the close of business on December 11th (midnight) to generate your transportation cost report. Your supervisors would like you to be succinct, but complete. They want breakouts of transportation costs by farming community and mode. You must fully identify any assumptions you make and how confident you are in your assumptions.