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Cheapest Car Rentals rents cars at Chicago airport. The short-term (ST) segment rents a car for an average of 0.5 weeks (a a rental price of $200 week), and the medium-term (MT) for an average of 2 weeks (a a rental price of S100/week).
Cheapest currently rents 200 cars week to ST and 100/ week to MT.
Around 20% of returned cars need to be repaired (a S150/car, average repair time 2 weeks) before being rented out again.
The rest of the cars are cleaned $5/car (average cleaning time 1 day) and sent out to rent.
(a) Draw a process flow diagram.
(b) Apply Little's Law at each operation.
(c) Estimate the maximum profit per week that Cheapest can make. Assume a depreciation charge of $40/car/week.
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