Originally posted by maven2:
1) If I increased my fleet from 10,000 to 20,000, I'd
employ more heads of departments and overseers and of course more
drivers. I'd also have to build additional depots and interchanges.
And because my CEO is managing more and has more on his plate, I'll
increase his pay as well. I'm not sure about the amount, but I'll
increase his pay nonetheless... substantially.
What you are talking about are direct and variable cost. What you
dont need to increase is the fixed overhead. CEO are not operation
people they can run a company with a million trains, and if the
same business model is being duplicated, the cost of duplicating be
is lower. CEO get paid more if the company makes more money and the
share price goes up, not because the company is buying more trains.
Maybe you should read up more on economy of scales to get a better
understanding of what I am talking about.
2) When you have higher ridership, because the current
fleet of trains are insufficient, I have to once again buy more
trains and build more depots. And perhaps more lines to reach more
places because the demand for it is there. I also might have to
extend work hours, some of which wont be packed but have moderate
amount of people. As it is the trains are already almost 100%
utilised. When we have more people and more trains.. it still will
be 100% utilised. There wont be a difference in the percentage
utilisation. So costs wont go down. But I built more facilities and
lines?
The train line in Singapore are build by our government, not the
train operators, if you have more ridership, your utilisation of
asset and manpower employed will be higher which mean cost will go
down, not up.
