Please answer question 1 from the attached case analysis.
Mid-Atlantic Bus Lines
CASE 7.3
Mid-Atlantic Bus Lines was founded by a group of managers from Trailways when that company was acquired by Greyhound. They launched a first-class, express bus service operating between the major coastal cities from Philadelphia, Pennsylvania, to Jacksonville, Florida. By hiring laid-off Trailways drivers and leasing buses, they established franchises in each city with local entrepreneurs, who were given the right to operate a Mid-Atlantic bus terminal. A percentage of the passenger ticket sales and freight sales would be kept by the terminal operator to cover his or her costs and profit.
Questions:
1. Use DEA to identify efficient and inefficient terminal operations. Formulate the problem as a linear programming model and solve using computer software such as Excel Solver that permits input file editing between runs.
2. Using the appropriate reference set of efficient terminals, make recommendations for changes in resource inputs for each inefficient terminal.
3. What recommendations would you have for the one seriously inefficient terminal in regard to increasing its outputs? Discuss any shortcomings in the application of DEA to Mid-Atlantic Bus Lines.
After several months of operation, some franchisees complained about inadequate profits and threatened to close their terminals. Because other franchisees were pleased with their experiences, however, a study of all terminal operations in the system was undertaken. The information in Table 7.10 represents a typical day's operations and was collected over several weeks.
TABLE 7.10 Outputs and Inputs for Mid-Atlantic Bus Lines
Bus Depot
City Served Philadelphia, PA Baltimore, MD Washington, D.C. Richmond, VA Raleigh, N.C. Charleston, S.C. Savannah, GA Jacksonville, FL
Ticket Sales 700 300 200 400 500 500 800 300
Freight Sales 300 600 700 600 400 500 500 200
Labor-Hours 40 50 50 50 40 50 40 30
Facility Dollars 500 500 400 500 400 500 600 400
