The Robot Company franchises combination gas and car wash stations throughout the United States. Robot gives a

Question:

The Robot Company franchises combination gas and car wash stations throughout the United States. Robot gives a free car wash for a gasoline fill-up or, for a wash alone, charges $0.50. Past experience shows that the number of customers that have car washes following fill-ups is about the same as for a wash alone. The average profit on a gasoline fill-up is about $0.70, and the cost of the car wash to Robot is $0.10. Robot stays open 14 hours per day. Robot has three power units and drive assemblies, and a franchisee must select the unit preferred. Unit I can wash cars at the rate of one every five minutes and is leased for $12 per day. Unit II, a larg- er unit, can wash cars at the rate of one every four minutes but costs $16 per day. Unit III, the largest, costs $22 per day and can wash a car in three minutes. The franchisee estimates that customers will not wait in line more than five minutes for a car wash. A longer time will cause Robot to lose the gasoline sales as well as the car wash sale.

If the estimate of customer arrivals resulting in washes is 10 per hour, which wash unit should be selected?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Operations Management For Competitive Advantage

ISBN: 1572

11th Edition

Authors: Richard B. Chase, F. Robert Jacobs

Question Posted: