EXERCISE : TRANSPORTATION MODES

BASIC CONCEPTS: transport systems (typology), total travel time,

concurrence and competence, cost driven decisions, cost of opportunity,
relevant (irrelevant) cost, concurrence, depreciation (linear) as a cost, flux
variables, risk of evolving prices

PART 1: OLD STYLE EXERCISE.

Manuel is a self employed consultant based in Madrid. He is about to start an

assignment in Sevilla for 6 months. His plan is to travel to Sevilla every Monday
early morning and return to Madrid every Friday after work. Transportation time
savings will be translated in higher availability at the customer facilities and, will
therefore be invoiced.

Manuel is trying to come up with a choice about the transportation to use. He is

considering 3 alternative choices: car, plane or AVE.

Manuel´s hourly rate is 80 euros per hour

CAR:
- It is almost brand new, Manuel paid 20000 euros for it. He likes to
change car every 200000 km
- Needs to be serviced every 15000 kms. Service billing is 200 euros
average
- Tyres: 800 euros/set. To be replaced every 40000 km
- Insurance: 1500 euros/year fully comprehensive
- Fuel consumption: 7 litres/100 km
- Fuel price: 1.20 euros/litre
- Distance Madrid-Sevilla: 500 km
- Average speed = 120 km/h
AVE:
- Round trip 150 euros
- Need to show up 30 minutes before departure
- Takes 2 hours 30
PLANE
- Round trip 300 euros
- Need to show up 60 minutes before departure
- Takes 1 hour

Taxis to and from the airport or train station to and from Manuel´s home and
work at Sevilla are 20 euros per trip each.

Manuel does not like driving. He is not very fond of flying either, but what he
does not really like is spending more than he should, so he will make his choice
based on purely economic criteria.

What would be his choice?

PART 2: BOLONIA´S WAY EXERCISE. Not all the data are available, need to
be searched or rationally guessed.

I AM a self employed consultant based in Madrid, about to start an assignment

in Sevilla for 6 months. I plan to travel to Sevilla every Monday early morning
and return to Madrid every Friday after work. The sooner I get there, the sooner
I start invoicing. It would also be good to make the most out of my time there.

I need to choose how to go.

My hourly rate is 80 euros per hour

I´ve got a car that I may use:

- It is almost brand new, a Scenic Turbodiesel. I like to change car every
200000 km

I do not like driving. I am not very fond of flying either, but what I do not really
like is spending more than I should, so I will make my choice based on purely
economic criteria.

Taxis to and from the airport or train station to and from my home and work at
Sevilla are 20 euros per trip each.