Objective: A car wash company wants to maximize its capacity utilization and total profits for the eight-hour workday (9:00 am to 5:00 pm). The operations manager of this company should work on two scenarios (challenges): (a) the no variation and (b) the variation. In the former scenario, there is no variability in demand and process (supply), while in the latter scenario, variability is present.
Key concepts: Capacity utilization; Cycle time; Throughput: flow rate (or throughput rate) and flow time (or throughput time); Inventory (or work-in-process); Little’s law; Variability in demand and process
Specifications: The customer arrival rate varies according to the time of day, with a peak in demand from 12:00 pm to 1:00 pm. Serving as the operations manager of the car wash company, you are responsible for allocating the company’s entire budget of $3 million to the three stages of the process (i.e., the vacuum, the machine wash, and/or the hand dry stations) to maximize efficiency and thereby overall profitability.
Questions
1. Please work on two scenarios/challenges (i.e., no variation and variation) and run the simulations as many times as you want to identify the: (a) maximum profit, (b) optimal number of cars should be washed to maximize profits, (c) optimal budget (available budget: $3 million) allocation to the three stages.
Tip: the optimal budget allocation for Challenge 1 (i.e., no variation) is as follows:
Vacuum: $1,000,000; Wash: $500,000; Hand Dry: $1,500,000; Profit: $825
2. Please provide key findings identified while running the simulations, which would facilitate profit maximization, and a screenshot with capacity utilization graphs for the three stages referring to your optimal solution for each Challenge separately.
3. Drawing on the simulations you performed, (a) would you prefer to work in an environment without variation (i.e., Challenge 1) or with variation (i.e., Challenge 2)? (b) Which of the two scenarios (e.g., without variation or with variation) is more realistic? (c) Taking into account the more realistic scenario, make recommendation(s) to improve the operation and mention the possible disadvantage(s) of your recommendation(s). Justify your answer.
To access the simulation, kindly click the following link:
https://hbsp.harvard.edu/import/930971
Before starting the simulations, kindly go through the “How to access your Coursepack” pdf file attached
