2
Analysis
Table of Contents
Q1 – Raw Data Worksheet 3
Q2 – Simulation Worksheet 12
Question 1: 15
Question 2: 15
Questions 3-7: 17
Question 8: 17
Question 10: 18
Question 9: 19
Q3 – Simulation Worksheet 19
Question 1: 22
Question 2: 22
Questions 3-7: 22
Question 8: 23
Question 10: 23
Question 9: 24
Question 11: 24
Question 12: 25
Question 13: 25
Question 14: 28
Question 15: 28
Question 16: 28
Question 17: 28
Q4 – Simulation Worksheet 29
Question 1: 32
Question 2: 32
Questions 3-7: 32
Question 8: 33
Question 10: 34
Question 9: 34
Question 11: 34
Question 12: 35
Question 13: 36
Question 14: 38
Question 15: 38
Question 16: 38
Question 17: 38
Q5 – Simulation Worksheet 39
Question 1: 41
Question 2: 41
Questions 3-7: 41
Question 8: 42
Question 10: 42
Question 9: 43
Question 11: 43
Question 12: 44
Question 13: 45
Question 14: 47
Question 15: 47
Question 16: 47
Question 17: 47
Q1 – Raw Data Worksheet
Step 1: I first put in the following formulas to get the IAT sample statistics.
To begin I ran the FIT test with the IAT values ($A$2:$A$148) and the FIT options in the image below. Choosing the Discrete type because the values are all integers. Even if selecting the various Fitting to have selected either Allow Shifted Distributions, Run Sample Independence Test, or both in addition to AIC/BIC statistics or Chi-Square statistics the results are all almost identical.
From the FIT results we see that the best fitting distribution ranked according to the Chi-Square test is Geometric, then NegativeBinomial, then IntegerUniform, and then Poisson.
Discrete
If I were to have chosen to go with the Continuous type we would have received very similar results that can be seen in the chart below. You can view that in the shape. However, notice that the best fitting distribution is no longer Geometric but Logical.
Step 2: When closing the chart, we are prompted if we want to accept the fitted distribution.
After selected yes, then we are asked to select a cell to place the fitted distribution, which I then selected cell G17. We are then also auto populated the distribution chart in red along with probability parameters. You can easily see that there is a 90% chance likely hood a drive up inter-arrival time will fall somewhere between 0 and 23 minutes.
By looking at the formula bar you can now see the formula in the call as “=PsiGeometric(0.117788461538462)” along with the uncertain variable 25.
Now that we have the uncertain variable cell being fitted to the historical data this is now converted to a cell that we can run simulations and trials from. Using the following formulas as can be seen in the below image we tie each formula to G17.
Prior to running the simulation, the cells appear as errors. Once we run the simulation the results will appear.
If we repeat the same steps for the service time, we would get IntegerUniform as the best fitting distribution.
If we decided to go with continuous, we would receive the bel.
2. Question 12: 35
Question 13: 36
Question 14: 38
Question 15: 38
Question 16: 38
Question 17: 38
Q5 – Simulation Worksheet 39
Question 1: 41
Question 2: 41
Questions 3-7: 41
Question 8: 42
Question 10: 42
Question 9: 43
Question 11: 43
Question 12: 44
Question 13: 45
Question 14: 47
Question 15: 47
Question 16: 47
Question 17: 47
Q1 – Raw Data Worksheet
Step 1: I first put in the following formulas to get the IAT
sample statistics.
To begin I ran the FIT test with the IAT values ($A$2:$A$148)
and the FIT options in the image below. Choosing the Discrete
type because the values are all integers. Even if selecting the
various Fitting to have selected either Allow Shifted
Distributions, Run Sample Independence Test, or both in
addition to AIC/BIC statistics or Chi-Square statistics the
results are all almost identical.
3. From the FIT results we see that the best fitting distribution
ranked according to the Chi-Square test is Geometric, then
NegativeBinomial, then IntegerUniform, and then Poisson.
Discrete
If I were to have chosen to go with the Continuous type we
would have received very similar results that can be seen in the
chart below. You can view that in the shape. However, notice
that the best fitting distribution is no longer Geometric but
Logical.
Step 2: When closing the chart, we are prompted if we want to
accept the fitted distribution.
After selected yes, then we are asked to select a cell to place the
fitted distribution, which I then selected cell G17. We are then
also auto populated the distribution chart in red along with
probability parameters. You can easily see that there is a 90%
chance likely hood a drive up inter-arrival time will fall
somewhere between 0 and 23 minutes.
4. By looking at the formula bar you can now see the formula in
the call as “=PsiGeometric(0.117788461538462)” along with
the uncertain variable 25.
Now that we have the uncertain variable cell being fitted to the
historical data this is now converted to a cell that we can run
simulations and trials from. Using the following formulas as can
be seen in the below image we tie each formula to G17.
Prior to running the simulation, the cells appear as errors. Once
we run the simulation the results will appear.
If we repeat the same steps for the service time, we would get
IntegerUniform as the best fitting distribution.
If we decided to go with continuous, we would receive the
below chart with Lognormal as the best fitting distribution. A
key difference however is the probability parameters are
showing an exponential distribution between 5.98 and 11.86.
5. After selecting K17 as the destination for the IntergerUniform
distribution under certain variable cell, we get the below chart.
The probability and parameters chart shows a “uniform” with
each option just as likely being selected.
By looking at the K17 formula you can also see that excel has
automatically defined the lower limit and upper limit and set
them to 6 and 8. This is now what our spread sheet looked like.
If we were to run this simulation once with 10000 trials, we
would get the following results and charts.
There are a couple of things to notice. For the drive-up interval
times, you can see that there is a leftward leaning skew showing
greater probability with drive up times being around 0 to 5
minutes. For the service times, you can see that all three
options, the economy at 6 minutes, custom at 7 minutes, and
deluxe at 8 minutes are all evenly distributed at 3,333 selections
each.
Q2 – Simulation Worksheet
To set the initial seed value we click on the options button.
After doing so we enter the initial seed value into the Sim.
6. Random Seed: Field and click OK.
We ensure that the number of iterations/trials run is set to
10,000 and then we run the simulation.
After running the simulation, we get these results and
observations:
Question 1: In answering the Table 1 questions we see that the
average daily cars washed is 76.6
Question 2: In order to find the 95% probability of cars washed
per day exceeds value we have to double click on cell P5 and
we get the relative probability distribution as follows:
We then can click on the statistics button on the top right and
select percentiles:
Here we can see that the 95% of cars washed is 1-.95 which
equals .05 which is 66.
7. Questions 3-7: The answers to questions 3-7 on table 1 can be
referenced by looking at the spreadsheet.
Question 8: To get the answer for question 8 we have to double
click on cell P10 to pull up the relative probability distribution
for the average wait time and we get the following:
Then we have to go to the percentiles list to find the
percentages. Here we can see that for 10 minutes or less this is
28%.
Question 10: We’ll skip question 9 and come back to that next
to make finding that answer easier since it is asking for a
percentage of time between questions 8 and 10. To solve for
question to and figure out the % chance customer wait more
than 20 minutes, we look at the 20 minute mark and take 1
minus that percentage. In this instance it’s 70%, so 1-.7 = 30%
Question 9: Now we go back to question 9 and the answer to
that questions is simply 1 minus the percentages in question 8
and 10, which is 1-.28-.3 = 42%.
Q3 – Simulation Worksheet
In order to update these values, you first had to update the
minutes in cells P19-P21 from 6-8 to 5-7.
Before
8. After
By doing this, we started to get errors in some of the cells
showing #N/A. To fix this you have to update cells G7 – G105
from =PsiIntUniform(6,8) to =PsiIntUniform(5,7).
Now we can run the simulation without any errors and we get
the following chart and values.
Next, we follow the same steps that we did previous to start
answering the questions in table 1.
Question 1: In answering the Table 1 questions we see that the
average daily cars washed is 79.0
Question 2: By double clicking on Car Count OutPut for
question 2, we get the following chart with percentiles. We get
67
Questions 3-7: The answers to questions 3-7 on table 1 can be
referenced by looking at the spreadsheet.
Question 8: To get the answer for question 8 we have to double
click on cell P10 to pull up the relative probability distribution,
then click the drop down and change the display for percentiles
for the average wait time and we get the following:
9. Here we can see that for 10 minutes or less this is 81%.
Question 10: We’ll skip question 9 and come back to that next
to make finding that answer easier since it is asking for a
percentage of time between questions 8 and 10. To solve for
question to and figure out the % chance customer wait more
than 20 minutes, we look at the 20 minute mark and take 1
minus that percentage. In this instance it’s 98%, so 1-.98 = 2%
Question 9: Now we go back to question 9 and the answer to
that questions is simply 1 minus the percentages in question 8
and 10, which is 1-.81-.02 = 17%.
Question 11: To determine the improvement in annual profit we
take the new annual profit minus the base which is equal to
158,574.00 – 153,719 = $4,855.00
Question 12: To determine the improvement in wait time we
take 1 minus the new wait time divided by the old wait time and
we get 58.34%. We know this is the improvement because we
are trying to solve for the new wait time. To figure out the
formula for this we ask ourselves, “what is the percentage times
the old wait time that gives us the new wait time or [% x 17.81
= 7.42]? If we solve for x we get 7.42 (new time) divided by
17.81 (old time) is 41.66%. So, the improvement is the
difference of 1 - .4166 = which gives us 58.34%.
10. Question 13: To figure out the simple payback we have to look
at the problem and fill in the missing information on the Q1
Raw data tab for the loan calculation. In the case, it states that
the blower investment is $11,500 and the annual rate of the loan
is 6.5%. To figure out the monthly interest rate we just take 6.5
divided by 12 which gives us 0.54%. The number of year stated
in the problem is 3, so this would give us a total number of 36
months. To solve for the loan payment in months we can use a
build in Excel formula called PMT. This formula we use the
rate, number of periods, and present value to solve for the loan
payment. We get a monthly payment of $352.46 which includes
compounding interest.
We can then use the same function but instead use the annual
rate of 6.5% and number of periods as 3 and we get an annual
loan payment of $4,342.12.
Now that we have the annual loan payment we can figure out
the simple payback of the loan assuming if we earn an annual
profit of $4,855 how many years does it take us to payback? So,
our total debt for the 3 years is going to be $4,342.12 x 3 =
$13,026.36. Now we take the total debt divided by the annual
profit of $4,855 and we find out it will take us 2.68 years to
payback.
Question 14: Annual loan repayment - We already answered.
It’s $4,342.12.
11. Question 15: Profit improvement - This is just the profit minus
the loan payment per year. $4,855.00 - $4,342.12 = $512.88
profit improvement.
Question 16: TOTAL INVESTMENT - We already answered.
It’s $11,500.00.
Question 17: 3-year loan monthly repayment - We already
answered. It’s $352.46.
Q4 – Simulation Worksheet
To begin we update/add the new table from the Q1 raw data tab
onto the Q4 Simulation Worksheet for Simulation.
The main things you have to be concerned about is adding the
elite row and updating the probability percentages to reflect.
Next you have to update the service time column like we did in
the Q3 worksheet because now the service times go from 5 – 8.
You also have to update column L to include the elite row you
added and now you are good to run the simulation. The errors in
column M will be gone once you update all of column L.
From running the simulation, we get the following charts and
variables:
12. We now repeat what we did for Q3 in answering all of the table
1 questions however I won’t be fully repeating all the written
instructions just mainly showing the images and results.
Question 1: In answering the Table 1 questions we see that the
average daily cars washed is 78.1
Question 2: By double clicking on Car Count OutPut for
question 2, we get the following chart with percentiles. We get
67
Questions 3-7: The answers to questions 3-7 on table 1 can be
referenced by looking at the spreadsheet.
Question 8: To get the answer for question 8 we have to double
click on cell P10 to pull up the relative probability distribution,
then click the drop down and change the display for percentiles
for the average wait time and we get the following:
Here we can see that for 10 minutes or less this is 53%.
Question 10: We’ll skip question 9 and come back to that next
to make finding that answer easier since it is asking for a
percentage of time between questions 8 and 10. To solve for
question to and figure out the % chance customer wait more
than 20 minutes, we look at the 20-minute mark and take 1
minus that percentage. In this instance it’s 88%, so 1-.88 = 12%
13. Question 9: Now we go back to question 9 and the answer to
that questions is simply 1 minus the percentages in question 8
and 10, which is 1-.53-.12 = 35%.
Question 11: To determine the improvement in annual profit we
take the new annual profit minus the base which is equal to
165,449.00 – 153,719 = $11,730.00
Question 12: To determine the improvement in wait time we
take 1 minus the new wait time divided by the old wait time and
we get 34.19%. We know this is the improvement because we
are trying to solve for the new wait time. To figure out the
formula for this we ask ourselves, “what is the percentage times
the old wait time that gives us the new wait time or [% x 17.81
= 11.72]? If we solve for x we get 11.72 (new time) divided by
17.81 (old time) is 65.81%. So, the improvement is the
difference of 1 - .6581 = which gives us 34.19%.
Question 13: To figure out the simple payback we have to look
at the problem and fill in the missing information on the Q1
Raw data tab for the loan calculation. The only real difference
here is adding in the RainX Investment amount of $8,000 which
now gives us a new TOTAL investment of $19,500. All the
formulas will remain the same. We get a monthly payment of
$597.66 which includes compounding interest and we get an
annual loan payment of $7,362.73.
14. Now that we have the annual loan payment, we can figure out
the simple payback of the loan assuming if we earn an annual
profit of $11,730 how many years does it take us to payback?
So, our total debt for the 3 years is going to be $7,362.73 x 3 =
$22,088.19. Now we take the total debt divided by the annual
profit of $11,730 and we find out it will take us 1.88 years to
payback.
Question 14: Annual loan repayment - We already answered.
It’s $7,362.73.
Question 15: Profit improvement - This is just the profit minus
the loan payment per year. $11,730.00 - $7,362.73 = $4,367.27
profit improvement.
Question 16: TOTAL INVESTMENT - We already answered.
It’s $19,500.00.
Question 17: 3-year loan monthly repayment - We already
answered. It’s $597.66.
Q5 – Simulation Worksheet
To begin doing this simulation we can go off of the Q4 updates
that were made and simply change the prices to the new lower
amounts updated probability percentages.
From running the simulation, we get the following charts and
variables:
15. Now we do all the same things we did in the Q4 worksheet to
get the answers to table 1 however I will not be fully repeating
all the written instructions just mainly showing the images and
results.
Question 1: In answering the Table 1 questions we see that the
average daily cars washed is 78.1
Question 2: By double clicking on Car Count OutPut for
question 2, we get the following chart with percentiles. We get
67
Questions 3-7: The answers to questions 3-7 on table 1 can be
referenced by looking at the spreadsheet.
Question 8: There was obviously no change in wait time
because the times didn’t change and was the same as the Q4
simulation.
Question 10: There was obviously no change in wait time
because it was the same as the Q4 simulation.
16. Question 9: There was obviously no change in wait time
because it was the same as the Q4 simulation.
Question 11: To determine the improvement in annual profit we
take the new annual profit minus the base which is equal to
148,033.00 – 153,719 = ($5,686.00). This is a huge difference.
You can see that we have a negative improvement and we can
clearly see that we are not even making the base amount. We
can clearly see this is a bad pricing strategy.
Question 12: There was obviously no change in wait time
because it was the same as the Q4 simulation.
Question 13: There was no change the loan information only the
pricing and probability percentages. So the loan repayment
amount was the same.
Since the loan was the same but we are earning less than the
base year we will never make our money back and this is clearly
a bad pricing strategy. This in no way means that the loan is
bad, it is just a bad pricing strategy. You can see from the Q4
data that the additional investment in the Rain product is a good
idea based all the other data such as probability percentages.
Question 14: This didn’t change. It’s $7,362.73.
17. Question 15: Profit improvement – Call this profit disaster
instead. ($5,686.00) + ($7,362.73) = ($13,048.73) negative
improvement.
Question 16: TOTAL INVESTMENT - We already answered.
It’s $19,500.00.
Question 17: 3-year loan monthly repayment - We already
answered. It’s $597.66.
Group Case Using Simulation
QNT 5160
Bling Max Carwash
“Bling Max” Business Simulation Case
Bling-Max
Touch–Free Carwash in Fort Lauderdale, Florida
2
Bling Max Car Wash
Bernard “Bernie” West stood under a tall palm admiring his new
business and the many vehicles entering it on a
18. sunny Florida day. Bernie’s Bling‐Max Carwash had exceeded h
is expectations as a small service business among
many similar enterprises in Fort Lauderdale. Owned and operate
d by 32 year old Bernie, he had purchased the
business outright about six months ago, borrowing against his h
ouse and drawing down all his savings. The
carwash, about 8 years old with a single auto wash bay, was not
the newest equipment to be found in a modern
automated car wash, but it had been flawlessly maintained and
was the popular high pressure, touch free, Pulse‐
Pro equipment with excellent reliability. Best yet, the business
was located in the perfect spot in Fort Lauderdale,
near a major intersection close to offices, popular clubs, restaur
ants, and busy shopping areas. There were no
nearby competitors and Bernie wanted to keep it that way.
Bernie assessed the current business situation. Bling‐Max offers
its customers three levels of wash service,
“Economy”, “Custom”, and “Deluxe”, which are priced at $8.00
, $9.00, and $10.00 respectively. Based on Bernie’s
market research, the prices are slightly high but still competitiv
e, compared to other automated washes. More
important than pricing, he knew he had to do something to reduc
e wait times to keep customers from going
elsewhere.
Bling‐Max is open 7 days per week, 365 days per year from 8:0
0 AM to 6:00 PM. This 10 hour operating schedule
provides 14 “off‐hours” for the necessary cleaning, preventive
maintenance, and refill of wash chemicals. During
operating hours, arriving cars line up in a perimeter corral queu
e that holds 14 or more cars, depending on their
size. The first car arriving on or after 8:00 AM can pay with a
quick credit card swipe and enter the wash.
Successively arriving cars can swipe and enter as soon as they r
each the control panel at the wash entrance,
providing it is before 6:00 PM closure. At 6:00 PM the control
19. panel lights up the “CLOSED” sign and will not accept
new customers. The last car entering just before 6:00 PM gets a
complete wash cycle and exits normally. Any cars
remaining in line when the service ends at 6:00 PM are let out a
special gate by the maintenance technician who
has arrived to perform the standard daily maintenance.
To better understand customer complaints about the long lines a
nd wait time problem, Bernie gathered random
sample data at various times of day and on different days, recor
ding timing of customer arrivals entering the corral
and what wash service they ultimately picked. The wash proces
s times (Service Times) for the “Economy”,
“Custom”, and “Deluxe” washes are 6, 7, and 8 minutes respecti
vely, which includes credit card swipe, entry, and
drive‐off times. Since these three times are predominantly cont
rolled by sophisticated electronic timers in the
automated wash itself, any driver‐induced variance from the 6,
7, and 8 minutes is of no consequence (for
example, there are no 6.2 or 7.9 minute wash cycles, only 6, 7, a
nd 8 min.). The customer Inter‐Arrival Times (IAT)
and selected wash services are shown in the Excel file Q1 Raw
Data Worksheet.xlsx.
3
Bling Max Car Wash (cont.)
With six months financials completed, Bernie is confident that a
ll‐in costs (utilities, maintenance, chemicals, advertising, etc.) a
re 35%
of revenues. Since customers are balanced between offices and
shopping during the week, and restaurants, bars, and shopping o
n
weekends, there seems to be little variation from day to day or
20. within seasons. Demand is steady and strong all day, every day,
except
for an estimated 6% rain periods when the wash is idle.
The current car wash has the dryer blowers attached to the robot
ic wash arm, so the vehicle stays put after the wash and wax cyc
le
and during the one minute drying cycle. Bernie has found like‐
new blow‐off equipment at an industrial distributor and it is rea
dy to
install. He can purchase and install the blow‐off section at the
car wash exit portal, instead of the wash arm, for a total investm
ent of
$11,500, complete. This would de‐couple the one minute drying
cycle from the wash cycle, speeding up the service process by o
ne
minute per car, no matter which wash they chose. As a car fini
shed the wash cycle it would move forward toward the exit to ge
t
dried off. This investment would separate the wash and dry‐off
cycles, reducing all wash cycles by 1 minute and allowing the n
ext
customer to enter one minute earlier than before, thereby impro
ving throughput.
It makes sense to Bernie that his wait times could be improved
by a shorter cycle, but it is not obvious to what extent wait time
s and
lines would be improved, nor whether the investment is financia
lly justified. He could reduce average process time just by selli
ng
more economy washes. He also knows that he is not on the low
side of competition with his pricing and is concerned that long
waits
make it too easy for a competitor to setup a nearby carwash and
steal his market. Bernie is pondering adding a fourth wash sele
21. ction
and related pricing adjustments, as well the merits of investing i
n a new blow‐off section. Bernie knows that he can borrow the
$11,500 for the new blow‐off from his commercial bank with a
3 year loan at 6.5% APR, but there is gnawing risk in taking out
this loan
and pledging his carwash equity as collateral. He is thinking ab
out his wife, their two‐year old son, and a new child on the way
as he
considers his next steps. This business is everything to him and
his family. Can he afford to take this investment risk, should h
e look
for alternative improvements, or can he risk a big loss of busine
ss if he does nothing?
Bernie’s brother Craig has an automated car wash in Georgia. C
raig’s wash has four wash selections, consisting of Bernie’s thre
e
washes plus a higher‐end “Elite” wash using Rain‐X ™ brand gl
ass treatment chemicals from a special dispenser that costs $8,0
00 and
adds 1 minute to the Deluxe cycle time. Having run periodic sp
ecials Craig has given Bernie data on the relative popularity of t
he four
levels of washes based on price. Bernie is considering further i
nvestment to add this fourth wash selection and making pricing
adjustments accordingly, but he needs more clarity as he weighs
reduction of wait times with return on investment.
Bernie remembers some of Peter Drucker’s wisdom as he ponder
s his next steps: “Efficiency is doing things right and Effective
ness is
doing the right things”, coupled with the key question “What do
es the customer most value?”
4
22. Great Location, Convenient Hours
Bernie’s
Bling-Max
Carwash
For Your Convenience
8:00 AM to 6:00 PM
365 Days per Year!
5
Group Case
Understanding Bling Max
Scenarios Q2, Q3, Q4, and Q5
6
Bling Max Case Assignment
Put yourself in the position of a management consultant helping
Bernie with his
business improvement decision. Organize your approach as foll
ows:
1.
Analysis of Raw Data: Fit and describe the distributions represe
nted by the
IAT (inter‐arrival times) and customer‐selected services data in
23. the
furnished Excel file titled “Q1 Raw Data Worksheet”. Paste the
RSPE
histograms you develop for the IAT and ST (service time) data
on your Q1
Raw Data Worksheet and into the Appendix of your report.
2.
Current Situation: Open the furnished Excel file “Q2 Simulation
Worksheet” and build an RSPE simulation model for Bling‐Max
, set the
initial seed to 1234, run 10,000 iterations, and enter “current sit
uation”
data into Table 1. The current situation is long wash cycles with
the
integrated blow‐off attached to the wash arm.
3. New Blow‐off Investment: Save‐as
your completed Q2 Simulation
Worksheet using file name Q3 Simulation Worksheet. Update t
he model to
reflect the cycle times from the new blow‐off. Enter the Q3 out
put data
into Table 1. Calculate the loans and enter into the Raw Data fi
le.
7
Bling Max Case Assignment (cont’d)
4. New Blow‐off + 4‐washes with Pricing “a”: Save‐as
your completed Q3
Simulation Worksheet using file name Q4 Simulation Worksheet
24. . Update
the model to reflect the cycle times from the new blow‐off plus
the impact
of Q4 pricing (ref. Fig 3). Enter the Q4 output data into Table 1
.
5. New Blow‐off + 4‐washes with Pricing “b”: Save‐as
your completed Q4
Simulation Worksheet using file name Q5 Simulation Worksheet
. Update
the model to reflect the cycle times from the new blow‐off plus
the impact
of Q5 pricing (ref. Fig 3). Enter the Q5 output data into Table 1
.
Analyze the results from the Q2, Q3, Q4, and Q5 simulation sce
narios. What
business decision would you make and why? What are the impli
cations from
the standpoint of business performance and from customer perce
ption and
retention?
Follow the guidelines found on BB in the Format of a Managem
ent Report and
the Grading Rubric when writing a 4‐6 page (body) report. Plac
e completed
Table 1, Raw Data Tab tables, and simulation output charts in y
our report
Appendix section and use the model output to justify your concl
usions and
recommendations.
8
25. Raw Data Worksheet File, Raw Data Tab
Students to complete
these tables for Q1 Q2
Checkpoint submission.
Include in Appendix for
final report upload.
9
Raw Data Worksheet File, Summary Tab
10
Q2 ‐ Car Wash Current State
Wash
Arm
Dry‐off blower on wash arm
Select Wash Option
NOTE: The 1 min blow off occurs in the final minute of the wa
sh cycle
11
Q3 Process Improvement
26. New dry‐off blower at exit
Select Wash Option Wash Arm
(no blower)
NOTE: The blow‐off is decoupled (removed) from the wash cyc
le by placing it
at the exit. The new blower is not an “extra” blower, it simply
replaces the
old one on the wash arm. This saves 1 min of process time, sinc
e the car in
the wash bay can now move out after washing to get dried.
No dry‐off blower on wash arm
12
Current Services at Bling Max Carwash
Deluxe $10.00
• Ultra-Wax & protect
• Wheel clean
• Undercarriage
• Touchless wash
• Spotless rinse
• Super pre-wash
• Auto dry
Custom $9.00
• Wax
• Wheel clean
• Touchless wash
• Spotless rinse
• Auto dry
Economy $8.00
27. • Touchless wash
• Spotless rinse
• Auto dry
13
Wash Services Considered
4 Wash Selections
3 Wash Selections
Q2: Current Situation
WASH MINUTES PRICE
economy 6 $8.00
custom 7 $9.00
deluxe 8 $10.00
Q3: New Blow‐off
WASH MINUTES PRICE
economy 5 $8.00
custom 6 $9.00
deluxe 7 $10.00
Q4: New Blow‐off + 4 washes at old prices (a)
WASH MINUTES PRICE PROBABILITY
economy 5 $8.00 35%
custom 6 $9.00 25%
deluxe 7 $10.00 20%
elite 8 $11.00 20%
Q5: New Blow‐off + 4 washes at lower prices (b)
28. WASH MINUTES PRICE PROBABILITY
economy 5 $7.00 30%
custom 6 $8.00 20%
deluxe 7 $9.00 20%
elite 8 $10.00 30%
14
Financial Viability of a New Investment
What is the payback for installing a new blow‐off section at the
exit portal?
$11,500
investment
15
Thoughts Regarding Business Challenge
How to improve the process
to reduce waiting lines?
How to improve profitability
of the carwash?
RETURN ON INVESTMENTCUSTOMER RETENTION
16
29. Q1‐Q2 Check Point
and Final Report
NEXT STEPS
17
Complete Q1 and Q2 spreadsheets:
1. Q1 & Q2 Checkpoint: Complete Q1 Raw Data tab tables for
distributions, investments, and loans. Complete the Q2 column
of Table 1. This is your basis for comparison. See slides 9‐10.
2.
Email to Prof your group’s completed Excel files for Q1 and Q2
,
by due date in order to make sure your paper is on track. DO
NOT TRY TO UPLOAD TO BB.
3.
When Q1 & Q2 are OK’d, you can build Q3, Q4, and Q5 models
with some degree of confidence. For the final submission, you
will have FIVE independent Excel files representing Q1 – Q5
Next Steps:
18
• 4‐6 pages of text, all charts & tables in Appendix
•
Follow APA guidelines for format (margins, page numbers, tabl
e of
30. contents, references, etc.)
• See “Format of a Mgmt Report” on BB.
•
Construct a concise & complete problem statement (single well‐
constructed sentence)
•
Your text book is not a research reference. Use library or intern
et
research. Consider implications of investment and other factors
impacting this small business (e.g. NPV of 10 year cash flows)
• Read & follow the Rubric to prevent losing points
• Proofread for punctuation, spelling, & grammar
•
Check your analysis calculations, and support your findings wit
h your
analysis
•
In addition to Q2‐Q5 scenario models, you may do a QX for “Xt
ra”
credit. Add a half page to describe at the end, and furnish a QX
Excel
model. Credit will be aligned with the quality of the submissio
n.
Tips Regarding Final Report
19
Grading Rubric
31. See Syllabus for Details
20
Q1-Raw DataDrive up Inter-arrival times (IAT)Wash Service
Chosen by CustomerService Time (ST)All data in
minutes3.0economy6Q2 BASE: Situation NowQ3: New Blow-
offQ4: New Blow-off + 4 wash "a"Q5: New Blow-off + 4 wash
"b"1.0deluxe8WASHMINUTESPRICEWASHMINUTESPRICE
WASHMINUTESPRICEPROBABILITYWASHMINUTESPRICE
PROBABILITY3.0economy6economy6$8.00economy5$8.00eco
nomy5$8.0035%economy5$7.0030%5.0custom7custom7$9.00cu
stom6$9.00custom6$9.0025%custom6$8.0020%2.0economy6del
uxe8$10.00deluxe7$10.00deluxe7$10.0020%deluxe7$9.0020%1
.0economy6elite8$11.0020%elite8$10.0030%1.0deluxe8ANAL
YSIS OF SAMPLE VS FITTED
DISTRIBUTIONS1.0economy6INTERARRIVAL
TIMES:SERVICE TIMES:IAT Histogram 1ST Histogram
110.0deluxe8Descriptive StatisticsIAT SampleIAT
FittedDescriptive StatisticsST SampleST
Fitted2.0custom7Mean7.49ERROR:#N/AMean7.03ERROR:#N/
A2.0custom7Std Dev6.34ERROR:#N/AStd
Dev0.80ERROR:#N/A4.0economy6Min1.00ERROR:#N/AMin6.
00ERROR:#N/A1.0deluxe8Max33.00ERROR:#N/AMax8.00ERR
OR:#N/A23.0economy6Data Count147.00ERROR:#N/AData
Count147.00ERROR:#N/A2.0custom72.0economy6distribution5
distribution8.00018.0deluxe84.0deluxe83.0custom7LOAN
CALCULATION2.0deluxe8Q3Q4, Q521.0deluxe8Q3 Blower
Investment$ 11,500$ 11,5001.0deluxe8Q4, Q5 RainX
Investmt$ 8,000IAT Histogram 2ST Histogram
22.0deluxe8TOTAL investment$ 11,500$
19,5006.0deluxe814.0custom7Loan principal$ 11,500$
19,50018.0economy6Annual interest
rate6.50%6.50%11.0economy6Monthly interest
33. for 6% rain
days)$236,491.00$243,959.00$254,537.00$227,743.006Average
annual profit (adj for 6% rain
days)$153,719.00$158,574.00$165,449.00$148,033.007Average
wait time (min)17.817.4211.7211.728% chance that customers
wait 10 min or less28%81%53%53%9% chance that customers
wait 10 to 20 min42%17%35%35%10% chance customers wait
more than 20 min30%2%12%12%11Improvement in annual
profit vs. BASE (Q2) as $$4,855.00$11,730.00-
$5,686.0012Improvement in average wait vs. BASE (Q2) as
%58.34%34.19%34.19%13Simple payback vs. BASE (yrs @ 2
decimals)-2.68-1.883.8814Annual loan
repayment($4,342.12)($7,362.73)($7,362.73)15Profit
Improvement (#11) less Loan Payment (#14)$512.88$4,367.27-
$13,048.73TOTAL
INVESTMENT$11,500.00$19,500.00$19,500.003 year loan
monthly
repayment($352.46)($597.66)($597.66)=(4342.12*3)/4855=(736
2.73*3)/11730=(7362.73*3)/-5686
Q4-SimulationQ4 Simulation WorksheetOpen 8:00
am8.0hrs480minRain days idle (no biz)6%NOTE: FOR
PERSONAL AND TEAM USE ONLYClose 6:00
pm18.0hrs1080minDO NOT REPRODUCE OR DISTRIBUTE
EXCEPT AS PART OF YOUR TEAM SUBMISSIONProfit
Margin65%Customer CountCar Inter-arrival times (IAT)Clock
Arrival TimeAfter Hours = 0Start Wash ServiceService time
(ST)End Wash ServiceWait timeWash idle timeNo Rain
RevenueNo Rain ProfitRESULTSOUTPUTRISK Mean
(Daily)RISK Mean (Annual)004800048000$ - 0$ - 0Car
Count8078.126,79411.0304855282481.0301481.03058489.0305
0.00001.0305$ 11.00$ 7.15Revenue$ 759.00$ 741.87$
254,53723.7557219119484.7861489.03056495.03054.24430.000
0$ 9.00$ 5.85Profit$ 493.35$ 482.22$
165,44938.5900695883493.3761495.03057502.03051.65420.000
0$ 10.00$