Answer the given question with a proper explanation and step-by-step solution. can you provide an excel Example You operate a carwash with one machine. When you charge $10 per wash you expect to have 20,000 customers per year. For every 10c reduction in price you expect to add 250 customers per year. Your fixed cost is $100,000 per year and your variable cost is negligible. Your carwash is open 300 days a year 10 hours per day. It takes about 5 minutes to wash a car. Assume Poisson arrival and exponential service time. You consider pricing your car wash between $8 and $10 in 10c increments in order to maximize profit. Note that the arrival rate depends on the price you charge.   What price should you charge to maximize your profit disregarding customers’ waiting time in line? Suppose you lose 2c per minute of waiting in line per customer in good will (future business). How much should you charge to maximize profit? What will be your profit? How many customers will you serve? You must use data table for this question.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
icon
Related questions
Question

Answer the given question with a proper explanation and step-by-step solution.

can you provide an excel Example

You operate a carwash with one machine. When you charge $10 per wash you expect to have 20,000 customers per year. For every 10c reduction in price you expect to add 250 customers per year. Your fixed cost is $100,000 per year and your variable cost is negligible. Your carwash is open 300 days a year 10 hours per day. It takes about 5 minutes to wash a car. Assume Poisson arrival and exponential service time. You consider pricing your car wash between $8 and $10 in 10c increments in order to maximize profit. Note that the arrival rate depends on the price you charge.

 

  1. What price should you charge to maximize your profit disregarding customers’ waiting time in line?
  2. Suppose you lose 2c per minute of waiting in line per customer in good will (future business). How much should you charge to maximize profit? What will be your profit? How many customers will you serve? You must use data table for this question.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Probability Problems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.