Cheapest Car Rental rents cars at the Chicago airport. The car rental market consists of two segments: the short-term segment, which rents for an average of 0.7 weeks, and the medium-term segment, which rents for an average of 1 weeks. Cheapest currently rents an average of 200 cars a week to the short-term segment and 100 cars a week to the medium-term segment. Approximately 20 percent of the cars returned (evenly distributed across both segments) are found to be defective and in need of repairs before they can be made available for rent again. The remaining cars, not needing repairs are cleaned, filled with gas, and made available for rent. On average, there are 100 cars waiting to be cleaned (or in the cleaning process). The average cost of this operation is $5 per car. Cars needing repair spend an average of two weeks out of service and incur an average cost of $150 per car. Assume that cars are rented as soon as they are available for rent, that is, as soon as they have been cleaned or repaired. Short term renters pay $200 per week (not $200 per rental - rental time is shorter than a week), while medium term renters pay $120 per week. Assume each car loses $40 in value per week due to depreciation. What is the average weekly profit rounded to the nearest whole dollar? Please no excel. I have asked the same questions twice already, both incorrect answers. 1st 16,655 and 2nd time 17,800

• Lets gather all the data: Short term duration = 0.7 weeks, number of cars rented/week = 200, cost/week = 200/rental = 200*0.7 = 140 medium-term duration = 1 weeks, number of cars rented/week = 100 cost/week = 120/rental = 120*1 = 120 Gross Profit can be calculated based on the above data, Short term rental/week = 140 * 200 = 28000 Medium-term rental/week = 120 * 100 = 12000 Lets compute the costs associated with each segment, Short term segment costs: - Defective cars needing repairs = 0.2*200 = 40, 40 * 150 = 6000 - Cost of cars to be cleaned = 200-40 (repair needing cars) = 160, 160*5 = 800 - Weekly depreciation = 40*200 = 8000 Total cost for short term segment = 6000 + 800 + 8000 = 14800 Medium-term segment costs: - Defective cars needing repairs = 0.2* 100 = 20, 20*150 = 3000 - Cost of cars to be cleaned = 100 - 20 = 80, 80 * 5 = 400 - Weekly depreciation = 40*100 = 4000 - Total cost for medium term segment = 3000 + 400 + 4000 = 7400 Total rental for the week = 28000 + 12000 = 40000 Total cost incurred during the week = 7400 + 14800 = 22200 Weekly profit = total income - total cost = 40000 - 22200 = 17800

income statement	short term	meduim	total
rent revenue	28000	12000	40000
cleaning cost			545
repairing cost	10500	7500	18000
depercation	2800	2000	4800
averageweekly profit			16655

Formulae:

given data
	short term	meduim
weak	0.7	1
# of cars	200	100
return	0.1	0.1
cleaninig cost 5	5	5
#of cleaninig cost 109
cost of repair=75
rent price	200	120
depercaition = 20
income statement	short term	meduim	total
rent revenue	=C4*C9*C3	=D4*D9*D3	=SUM(C13:D13)
cleaning cost			=109*5
repairing cost	=C4*C3*75	=D4*D3*75	=SUM(C15:D15)
depercation	=C4*20*C3	=D4*20*D3	=SUM(C16:D16)
averageweekly profit			=E13-E14-E15-E16