Question
Mike Motors is a car rental company in Kenya. The company is considering expanding its business to offer car rentals at three of Kenyas major
Mike Motors is a car rental company in Kenya. The company is considering expanding its business to offer car rentals at three of Kenyas major airports: JKIA, Wilson and Mombasa. The service will be targeted at tourists who want a one-way car rental. That is, they want to pick up the rental car at one airport, drive it around the country while on vacation and then drop it off at the end of their trip at another airport. Most other companies expect the pickup and drop off to be at the same airport, so Mike Motors expects to attract considerable business. However, a one-way rental potentially will cause logistical difficulties as dropped off cars may be needed elsewhere because of high demand. Some market research information is available. It is estimated that of the rental cars picked up at JKIA airport, 40 per cent will be dropped off at Wilson airport, 20 per cent at Mombasa with the remainder actually being dropped off back at JKIA. For rental pickups from Wilson, an estimated 20 per cent will be dropped off at JKIA, 30 per cent at Mombasa with the remainder being returned to Wilson. For rental pickups from Mombasa, 30 per cent are expected to be returned to JKIA, 40 per cent to Wilson with the remainder returned to Mombasa. Determine the status of rentals in Mombasa airport in the long run.
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