Fred Weasley, owner of the Flying Ford Taxi Co., was facing a pricing challenge. He was wondering how to set the radio fee for his service. The radio fee is required in exchange for Flying Ford providing radio dispatch service to individual taxi drivers driving vehicles bearing Flying Ford’s colours. He has decided on a two-part fee structure, wherein a driver would pay a fixed fee (per month) in advance and then pay a variable fee for each Flying Ford dispatch. Flying Ford is one of largest among the city’s cab companies with a fleet of 1500 vehicles. The average fare value is $12 and average daily number of Flying Ford dispatches per car is 7.

a. Draw the influence diagram and blackbox diagram to help Weasley decide on the fixed and the variable fees. Assume two cases i) variable fee as a percentage of fare and ii) variable fee per dispatch.

b. Develop a base case spreadsheet model to help Weasley decide on the fixed fee and the variable fee when variable fee is a percentage of fare. Assume a base case fixed radio fee of $400 and 5% variable fee.

c. Develop a base case spreadsheet model to help Weasley decide on the fixed fee and the variable fee when the variable fee is charged per dispatch. Assume a base case fixed radio fee of $400 and $1 variable fee per dispatch.