Comparing travel options between San Francisco and Los Angeles

In this problem you will make a model to compare regular Amtrak train service, driving your own car, airplane fares, and Greyhound buses between San Francisco and Los Angeles. The following table summarizes data for the options:

Service Option	Time Required (hrs:min)	One-way Price
Current Amtrak	12:00	$67
Acela Express	16:00	$44
Airplane	1:30	$289 (last minute), $83 (advance)
Personal Car	?	$0.50/mi

Assumptions:

• Times are point-to-point
• Assume business travelers earn $150,000 per year and leisure travelers earn $50,000 per year (hint: value of time)
• All business passengers buy last-minute tickets and leisure travelers buy advance
• Assume Amtrak and Acela stations are downtown while the flights are at airports which require 30 minute taxi rides to/from downtown
• The cost of driving your own car is $0.50/mi
• Direct costs are those for which you pay money, this does not include travel or waiting time.

Associated other costs (e.g. travel time) are not provided.

1. For business and leisure passengers separately, which of the four alternatives has the lowest direct costs from San Francisco to Los Angeles?
2. Perform sensitivity analysis (provide a tornado diagram) on all parameters (including those for which I have assumed values for you and justifying your choice of high and low values) and discuss how your results change for direct costs.

Answer rating: 100% (QA)

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