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ABC Car Rental Inc

Management Oct 30, 2020

ABC Car Rental Inc. rents cars to leisure customers and business customers.The business customers rent cars on average of 0.5 weeks whereas the leisure customers rent cars for an average of 2 weeks. The company currently is renting on an average of 200 cars per week to business customers and 100 cars per week to leisure customers.
On average 5% of all cars returned needed some repairs before they can be rented again, that required 2 weeks in the repair shop and the cost is $150 per car on average. The remaining 95% of cars returned just needed cleaning to make them available for rent. On average, there are 100 cars in the cleaning shop at any time. The average cost of cleaning is $5 per car.
Assume that cars are rented as soon as they are available for rent, i.e. once cleaned or repaired. The business customers pay $200 per week for car rental, while the leisure customers pay $120 per week. The flow of cars is shown in the following figure.
What is the profit per week on average

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