Model for Determining Fixed Costs for the Winter Service Operation

Abstract

From the season 2005!06 a new dynamic model for the operationof the Winter Service in the Republic of Croatia will beused. The old model was based on three levels of readiness, andthe roads were categorised primarily according to their administrativedistribution. The new dynamic model has three levelsof readiness, while the first level is further divided into two servicelevels. The road is classified to a certain readiness and servicelevel according to the traffic, climate and economic conditions.The new model splits the cost structure into fixed and variablecosts. The investor wants to keep the fixed costs at a minimal/eve~ which will guarantee proper readiness for quick intervention.The investor wants to ensure a technological infrastructurefor quality cleaning of roads is created. The capitalcompanies want larger fixed costs to ensure certain profit, anddefined fixed costs enable them to asses the profitability of theWinter Service operation. Such structure fonils the followingrelationship: in mild winters the capital companies 'profit' andthe investor 'loses', and vice versa for cold winters. Mathematically,such relationship should be treated as a finite strategictwo-player game.This paper will show the model needed to forecast fixedcosts in the new dynamic model for operation of Winter Ser·vice, through consideration of connection of linear programmingand the matrix game theory, to study the problem in parallel,from the standpoint of both players.

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