The use of Daytime Running Lights has increased in popularity with car designers throughout the world. In

some countries, motorists are required to drive with their headlights on at all times. U.S. car manufacturers

now offer models equipped with daytime running lights. Most people would agree that driving with the

headlights on at night is cost effective with respect to extra fuel consumption and safety considerations (not

to mention required by law!). Cost effective means that benefits outweigh (exceed) the costs. However,

some consumers have questioned whether it is cost effective to drive with your headlights on during the

day.

The following data are given:

75% of driving takes place during the daytime.

2% of fuel consumption is due to accessories (radio, headlights, etc.).

Cost of fuel = 400 cent per gallon.

Average distance travelled per year = 24,140.1 Km.

Average cost of an accident = $2,800.

Purchase price of headlights = 2500 cent per set (2 headlights).

Average time car is in operation per year = 21000 minutes.

Average life of a headlight = 1200 operating minutes.

Average fuel consumption = 1 gallon per 30 miles.

Analyse the cost effectiveness of driving with headlights on during the day. Consider the following set of

questions:

What are the extra costs associated with driving with headlights on during the day?

What are the benefits associated with driving with headlights on during the day?

What additional assumptions (if any) are needed to complete the analysis?

Is it cost effective to drive with headlights on during the day?