Question

ShineCar is on-demand car wash and detailing company, allowing users to schedule a wash within minutes using their website or mobile application. Once a wash is booked, a trained team of experts arrive, place the car on a proprietary mat, then perform the selected service. As the skilled workers are performing the service, they use a technician application to update customers on the status of the service. When the service is complete, customers are alerted and their keys are returned.  

            Business is good but Serena, the manager, has noticed that customers complain because there are streaks on their vehicles at pickup. ShineCar warrants that each vehicle will sparkle at delivery and charges $35 for each vehicle. ShineCar washes 90 vehicles each day and last month, 50% of them required a hand finish. Each hand wash costs $15 per vehicle. Serena believes the problem can be eliminated by a prewash (costing $2 per vehicle) and an equipment calibration at the start of each day, which will reduce the number of vehicles washed each day by 10, but will decrease the vehicles requiring a hand finish from 50% to 5%.

            Besides the streak’s incidences, the company has been dealing with an increase in number of quality failure incidences. The types of incidences include service complaints by customers on the waiting time, quality of the wash, malfunction at the tunnel carwash due to lose of tunnel controller and slow flow in the process causing a long line of vehicles.

(a)Evaluate whether ShineCar should consider implementing Serena’s idea. Show appropriate computation.

(b)State FIVE nonfinancial factors that ShineCar need to consider in deciding whether to implement the new design to achieve competitive advantage.                                                                                        

                                    

Answer 1

A. Impact of implementing serenas idea on shine car per day:

Particulars	$
Reduction in revenue due to precaliberation required for equipment (10 cars *35$)per day	-350
Increased cost due to prewash per car (80cars *2$) per day	-160
Savings in handwash costs (45*15) per day	675
Net savings due to implementation of serenas idea per day	165

B.The following will five non financial factors impacting the shine cars decision to implement serenas idea

a) impact on current waiting time,

b) impact on quality of the wash,

c) impact on  line of vehicles.

d) impact on customer satisfcation

e) issues arising from practical implementation of idea.