Ocean Carriers
Background
Ocean Carriers Inc owned and operated capesize dry bulk carriers
that mainly carried iron ore worldwide. In January 2001, Mary Linn, vice
president of finance for Ocean Carriers, was evaluating a lease of a ship
for three years. Since, Ocean Carrier was not able to meet customer’s
requirements; Linn has to decide whether commission a new capesize
carrier immediately. New carrier would be completed two years. (Another
words, Linn has to evaluate whether to purchase a new cargo ship, and
lease it for three years.) Ocean Carrier’s vessels are mostly chartered for
1, 3, or 5 years. However, spot charter market is used occasionally.
( However, the proposed contract with the customer is only for 3
