The Bus Fleet Fuel Budget
A transport company runs 12 buses on a route. Each bus covers 240 km per day and consumes diesel at 3.2 km per litre. Diesel costs ₦1,150 per litre. Management wants to cut monthly fuel spend by 15% without reducing the number of trips. Two options are on the table. Option A: service the engines so efficiency improves to 3.6 km per litre, at a one-off cost of ₦420,000. Option B: reduce daily distance per bus by rerouting, saving 20 km per bus per day, with no upfront cost but adding 25 minutes to each trip. Assume a 30-day month.
1. Compute the current monthly fuel cost and the monthly cost under Option A.
Read the worked answer
Current litres per bus per day = 240 ÷ 3.2 = 75 L. For 12 buses: 900 L/day. Monthly = 900 × 30 = 27,000 L.
Current monthly cost = 27,000 × ₦1,150 = ₦31,050,000.
Option A: litres per bus per day = 240 ÷ 3.6 = 66.67 L. For 12 buses: 800 L/day. Monthly = 24,000 L.
Option A monthly cost = 24,000 × ₦1,150 = ₦27,600,000.
2. Compute Option B's monthly fuel cost and judge which option better meets the 15% target, accounting for the upfront cost.
Read the worked answer
Option B distance per bus = 220 km/day. Litres = 220 ÷ 3.2 = 68.75 L. For 12 buses: 825 L/day. Monthly = 24,750 L.
Option B monthly cost = 24,750 × ₦1,150 = ₦28,462,500.
Savings vs current: Option A = 31,050,000 − 27,600,000 = ₦3,450,000/month (≈11.1%). Option B = ₦2,587,500/month (≈8.3%).
Neither reaches 15% on fuel alone. Option A saves more each month but needs ₦420,000 upfront, recovered in under a week of savings. Option A is the stronger choice on both savings and payback, though management must combine it with another measure to hit the full 15%.