Question

ABC Car Rental Inc. rents cars to leisure customers and business customers. The business customers rent cars on average of 0.5 weeks whereas the leisure customers rent cars for an average of 2 weeks. The company currently is renting on an average of 200 cars per week to business customers and 100 cars per week to leisure customers.

On average 5% of all cars returned needed some repairs before they can be rented again, that required 2 weeks in the repair shop and the cost is $150 per car on average. The remaining 95% of cars returned just needed cleaning to make them available for rent. On average, there are 100 cars in the cleaning shop at any time. The average cost of cleaning is $5 per car.

Assume that cars are rented as soon as they are available for rent, i.e. once cleaned or repaired. The business customers pay $200 per week for car rental, while the leisure customers pay $120 per week.

What is the profit per week on average?

Answer 1

Ans: Renting to business customers: 200 cars per week rents on an average 0.5 week

therefire Renting pee weelk is 200*0.5 = 100 cars per week

rental per week for car is $ 200, therefore total rent from business customer is: $ 200*100 = $ 20000,less returned

that is 5% of 20000 =$ 19000

Renting to leisure customers: 100 cars per week rents on an average 2 weeks

therefire Renting pee weelk is 100*2= 200 cars per week

rental per week for car is $ 120, therefore total rent from business customer is: $ 120*200 = $ 24000,less returned 5% of 24000 = $ 22800

Total revenue per week is $ 19000 + $ 22800 = $ 41800

Cars returned on an average 5% of 300 = 15 cars,cost of repair per car is $ 150

Repaired cost = 15 *$150=$ 2250

CLleaning cost is $ 5,on an average 100 cars are in cleaning

Cleaning cost is 100*$5 = $ 500

Profit per week on average is : $41800 - $ 2250 -$ 500 = $ 39050