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ME 2027 Performance and Cost Analysis KTH 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 Price Fixed Cost Quantity The total cost of running a train is almost the same whether the reservations are made to it´s fully capacity or not Price Revenues Fixed Cost Quantity The revenues must cover the fixed cost before the company could show profit Price Total Quantity Total Cost Quantity Total cost is constant and the total revenue is changing depending on the quantity Price Total Quantity Total Cost Quantity 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. Price Supply Demand Quantity The above example illustrates traditional thinking of supply and demand. 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 Volymutveckling X 2000 Göteborg (personkm) 27 500 000 25 000 000 22 500 000 Bok & Biblioteksmässa Göteborg Läkarstämma Göteborg Stormen "Per" har påverkat W02 kraftigt. 20 000 000 17 500 000 15 000 000 12 500 000 10 000 000 7 500 000 5 000 000 2 500 000 0 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