Question

A dispatcher for Citywide Taxi Company must allocate taxicabs to customers based on their locations. How can you determine the optimal allocation to minimize mileage and improve service?

Answer 1

The taxicab industry in large cities benefits from significant economies of scale, which allows larger companies to provide more efficient service at a lower cost per mile.

Step-by-step explanation:

The taxicab industry in large cities is subject to significant economies of scale.

Economies of scale occur when the average cost per unit decreases as the quantity produced increases. In the case of the taxicab industry, larger companies can benefit from economies of scale by spreading their fixed costs (such as dispatchers, maintenance, and administrative expenses) over a larger number of taxicabs. This allows them to provide more efficient service at a lower cost per mile.

For example, a large taxicab company may have a centralized dispatch system that uses advanced technology to allocate taxicabs based on customer locations. This system can optimize routes and minimize mileage to improve service and reduce costs. By efficiently allocating taxicabs, the company can ensure that each customer is picked up and dropped off in the most efficient manner, saving both time and fuel.