ME 2027 Performance and Cost AnalysisKTH 2007

By Johan Forsberg and Filip Westerlind

SJ is the mayor rail road company in Sweden and it´s 100 % government owned

We have chosen to look at the cost of running one train

Among the many cost models used by SJ we decided to look at CVP, a form that evaluates the time dependent way of supply and demand sales

The total cost of running a train is almost the same whether the reservations are made to it´s fully capacity or not

Fixed Cost

Quantity

Price

The revenues must cover the fixed cost before the company could show profit

Quantity

Price

Fixed Cost

Revenues

Total cost is constant and the total revenue is changing depending on the quantity

Total Cost

Total Quantity

Quantity

Price

Fixed cost can change and therefore the total cost may change. The fixed cost is in reality a partly fixed cost.

For example, when an additional wagon is needed due to increased capacity the fixed cost will raise. In this scenario adding a wagon is a fixed cost rather than a variable cost.

Total Cost

Total Quantity

Quantity

Price

The above example illustrates traditional thinking of supply and demand.

Price

Quantity

DemandSupply

In SJ´s case demand increases closer to departure time, i.e. demand depends on time

The supply is constant, because the number of seats available are same

The sooner the ticket is bought the cheaper it is for the customer

By offering prices according to demand SJ maximizes the reservations, i.e. they change prices frequently over time

Yieldutveckling totalt per klass, X 2000

(personkm)

0

2 500 000

5 000 000

7 500 000

10 000 000

12 500 000

15 000 000

17 500 000

20 000 000

22 500 000

25 000 000

27 500 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

Vecka

2006 2007

Bok & BiblioteksmässaGöteborg

LäkarstämmaGöteborg

Stormen "Per" har påverkat W02 kraftigt.

Volymutveckling X 2000 Göteborg