A town is considering offering a municipal bus service to its residents and it needs to determine
Question:
the expected revenue for each operating bus. During the daily off-peak hours, R2=208 0.1b24is the revenue per operating bus. The variable cost (cost of the driver) of $80 is paid in either period the buses are operated. The capital cost of $20 per bus is paid once per day(24 hours) whether the bus is used or not (Note: a fractional number of buses may be interpreted as operating some of the buses for only a portion of the peak or off-peak period.)
a)Write the Lagrangian and the Kuhn-Tucker conditions.
b) Explain the problem and solution fully.
c)What are the optimal number of buses used in each period and the total number of buses?
d)Is it worthwhile operating the off-peak service? Explain.
Note: Please solve the question using Kuhn-Tucker Conditions analytically(MUST DO)
Physics
ISBN: 978-0077339685
2nd edition
Authors: Alan Giambattista, Betty Richardson, Robert Richardson