Rent a Car Phase 1

02.4.2016 | | Memo #1 – Phase 1- Rent-A-Car |

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Comments:

The dependent variable in our model will be the quantity of economy vehicles rented each day. We want to make sure that we have the appropriate amount of vehicles in our fleet. Ensuring we have enough vehicles will reduce the cost of upgrading economy car customers for no charge and costs incurred by transferring vehicles from Indianapolis. Also, we will make efforts to not retain too many cars in our fleet as well. This will reduce the fixed costs associated with each car we have on the lot. These fixed costs include washing the cars, insurance, property taxes, and more.

It is important that we narrow down our variables to include only relevant factors related the demand of economy cars. We will measure the simultaneous effect of each of the following variables:

* #1 – Our Economy Car Rental Price – Customer will often compare our prices with our direct competitor. If our prices increase for economy car rentals we would expect a decrease in demand and vice versa. These will effect both of our customer bases. We will measure our prices in dollars per day of an economy car rental.

* #2 – Competitor’s Economy Car Rental Pricing – Once again, customers will compare our price and our competitor’s price. If competitor’s prices increase we would expect an increase in demand for our economy cars. We will measure this in competitor economy car rental price in dollars.

* #3 – Advertising Dollars Spent – Advertising will cause more people to recognize our business and the value we provide. As we spend more money advertising our service we would expect an increase in demand. We will measure this in advertising dollars spent in the current month.

* #4 – Weekend or Weekday – Many people travel or take leisure trips during weekends. Therefore, we could expect an increase in demand during the weekends. We will measure this with a 1 for weekend and a 0 for weekday

* #5 – Gas Prices – Fuel...