Reliable public transport system is an imperative factor for nation’s growth. In Indian cities, buses are convenient mode for all classes of society but effective operation of this proves to be an exigent task. The objective of this study is to optimize the total cost of the public transit bus system for a Tier II city. The methodology involves collection of data, developing a total cost function and optimizing the total cost. The total cost function consists of user cost and operational cost. The user cost considers the parameters: value of time, number of bus stops, distance between the bus stops and headway. The vehicle operation cost consists the parameters: road width, rise and fall of the road and roughness. The criterion for the optimality is to minimize the total cost objective function based on algorithmic approach and results shows an improvement in economy with existing rolling stocks.