Lisa's Ferry Company

Lisa is considering adding ferry services between June Island and Starfish Island. Lisa can rent ferries on a monthly basis at $3,200 per ferry, per month. Each ferry can accommodate 75 passengers, and can make 8 one-way trips a day, 30 days a month. Lisa decides to charge $6 per one-way ride.

Lisa has the following costs:

Ticket processing: $.50 per passenger

Taxes: $.80 per passenger

Fuel: $105.00 per one-way trip

Crew Salaries: $60.00 per one-way trip

Ferry Cleaning: $25.00 per one-way trip

Shore costs vary with the number of ferries in the following manner:

Number of Ferries to Total Shore Costs

1 Ferry = $12,000 per month

2 Ferries: = $13,000 per month

3 Ferries = $14,000 per month

4 Ferries = $15,000 per month

Lisa knows that the demand is uncertain, but that demand and frequency are connected. The expected demand given different frequencies of service is as follows: Number of One-Way Trips Per Day Passengers Expected per One-Way Trip 1-6 one way trips 80 passengers 7-12 one way trips 86 passengers 13-16 one way trips 93 Passengers 17-20 one way trips 108 Passengers 21-24 one way trips 112 Passengers