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Dollar Bus Company has set an objective to fully comply with published bus schedules to ensure consistent on-time service. The company knows that shorter routes per bus minimize delays caused by unforeseen issues. Shorter routes require a greater investment in the fleet. The company currently achieves an 83% compliance rate with the schedule and does not expect a significant increase or decrease in ridership or revenue as compliance improves to 100% but does see revenues fall off significantly when buses are late more that 20% of time. The company's objective setting would logically develop as follows:


a.

Compliance with the bus schedule would be reviewed in relation to the risk of lost ridership within tolerable compliance percentages above 80%.

b.

Tolerable levels of variation from compliance with stated bus schedules are established as a means of establishing realistic compliance objectives.

c.

Compliance rates of 80% would become the objective and additional investments in buses would be required to reduce risk.

d.

Additional busses would be acquired to achieve the objective and incentives would be provided to drivers who consistently meet requirements.

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