Operation Management

Topics: Revenue, Homework Pages: 3 (315 words) Published: August 13, 2011
Homework Assignment #3 : Quantitative Problem Set 2

Group 6

Q 7.3(Car Rental Company)

m= 50
| (hour)|
a| 2.4|
CVa| 1.000|
p| 72.0|
CVp| 0.333|

a. The average number of SUVs parked = 50cars × (1 – 60%) = 20cars

* Utilization = p / ( a × m) = 72.0 / (2.4 × 50) = 60%

b. 1) Analysis of process :
a. Calculate Utilization
b. Calculate Revenue
2) The daily revenue of this company increase from 2,400 to 2,640. (Revenue increases about 240)

| AS-IS| TO-BE| Variation|
a| 2.4| 2.0| -0.4|
P| 72.0| 96.0| 24.0|
Utilization| 60.0%| 96.0%| 36.0%|
Price| 80| 55| -25|
Revenue| 2,400| 2,640| 240|

c. Waiting time in the queue, Tq = 0.0192hr

d. Waiting time in the queue, Tq increases about 0.0268hr.
| AS-IS| TO-BE| Variation|
a| 2.4| 3.0| 0.6|
CVa| 1.0| 1.0| -|
p| 72.0| 96.0| 24.0|
CVp| 0.330| 0.000| -0.33|
Utilization| 60.0%| 64.0%| 4.0%|
Tq(hr)| 0.0192| 0.0460| 0.0268|

a. Q* = 75

R| 600|
Annual interest| 0.24|
Unit cost| 25|
K| 85|
H| 18.0|
Q*| 75.28|

Q* = 75, Annual Total Cost = 1,355.00000
Q* = 76, Annual Total Cost = 1,355.05263

b. Number of orders per year = R/Q* = 600 / 75 = 8

c. Holding Cost(month) = 56.25

| (Yearly)| (monthly)|
Holding Cost| 675.00| 56.25|

d. According to total cost and purchase cost, PBK should make a deal with the current supplier.

| AS-IS| TO-BE(Q*)|
R| 600| 600|
Annual interest| 0.24| 0.24|
Unit cost| 25| 20|
K| 85| 2,000|
H| 18.0| 16.8|
Q*| 75| 378|
Annual total cost| 1,355| 6,350|
Purchase cost| 15,000| 12,000|
Sum| 16,355| 18,350|