Capstone Case Study Henry Clements Car Rental Agency-MGMT 524

Directions: Carefully read through the following case study and answer all of the case study 

questions. Include supporting calculations and screenshots. Save your document with an 

appropriate file name that includes the activity number and your name (Example: 

john_smith_capstone). Submit your document through the Capstone Case Study Activity Link in 

the Exams area in Blackboard. 

Page 1 of 4 
Henry Clements is a friend of yours who has a car rental agency in a major 

metropolitan area. Although his is an independent company, Henry works closely with 

three other independent companies in the metro area. They share information and each 

week they forecast the number of cars each will need the following week. Then, if 

needed, they will transfer cars between location on Sunday when none of the agencies 

are open. If they have to go and get a car during the week, it will cost $75 per car, 

considering the lost time and good will of making the customer wait. Moving on Sunday 

gives the customer the option to return the car to any of the four locations and it has 

allowed Henry and the other agencies access to extra cars to meet their needs. 

Everyone is happy with this arrangement. 

Henry reviewed his company’s performance and he believes there is room for 

improvement. He has obtained records for the last three months. The data he collected 

are shown below. It is Friday and he has to input his forecast for the number of cars 

needed tomorrow. He knows you have been taking a class in Quantitative Analysis and 

has asked you to review his data and help with his forecast to determine what else he 

might to do increase his performance. As you discuss the situation with him, you learn 

that he wants to be able to meet the customers’ requirement for a vehicle 95% of the 

time. He says he rarely ever gets complaints if the exact model is not available, as long 

as he has a vehicle available, so he does not try to anticipate particular size or model 

requests and lets randomness take care of that. Weekly demand is as follows: 

Page 2 of 4 

Week Demand Week Demand 

1 126 7 243 

2 200 8 167 

3 243 9 131 

4 167 10 208 

5 132 11 251 

6 211 12 171 

In the past Henry has used the average number of cars as his basic number and adjusted to 

meet his goal of 95% service. He asks you about some other methods he has heard about. 

1. What should his forecast be using this method? 

2. What would the forecast be if he used regression analysis? 

3. What about time-series forecasting? 

4. What will you tell him about which is the best option? 

Henry has two people who can check cars out for a rental. One works at the service 

counter and the other works in the office and can come out to help if needed. Henry has 

determined that people arrive following a Poisson distribution. Rentals average about 24 per 

day and the service person takes about 15 minutes to process a customer for a rental. Henry 

sees that the agent at the service counter in not busy all the time so he is contemplating not 

keeping the office person trained and leaving only the service counter person. 

5. Is this a wise move? 

6. What is the average time the customer takes from when he/she arrives until he/she has 

a car? 

Currently, when the office person in serving customers, a second line forms in front of the 

counter. 

7. Is that how Henry should set up the waiting area or is there a better way? 

When a car is returned to his location, Henry has three employees who prepare the car 

for the next rental. As a car arrives, one of the employees takes the car and washes, cleans, 

vacuums, and inspects it, prepares the paperwork for the next rental, and returns the car to the 

lot. The employees each take a car in sequence. Henry has observed the process and has 

Page 3 of 4 

observed the time each takes to complete each step. The information about the times (in 

minutes) is as follow: 

Employees Wash Vacuum Inspect & Return 

Beverly 22 13 11 

Cameron 15 17 20 

Tina 19 19 14 

8. Is there is a better way to organize this part of the operations? 

Each rental requires two agreement forms, one for when the car is checked out and one 

when it is checked in. Henry orders these forms from a local printer. The printer charges Henry 

$40 to set up the printer. The forms cost 50cents each. Because of the damage to the forms 

and the forms becoming obsolete, it cost Henry 25% to store the forms. The printer will only 

accept orders in multiples of 100. 

9. If the three months of data collected and presented above is indicative of all demand, 

how many forms should Henry order? 

The printer offers Henry a 10% discount if Henry orders 5000 or more form at a time. 

10. Would this be advantageous to Henry? How much money would it save, if any? 

Henry is now ready compute what do with the cars on Sunday. The other locations 

report the following on-hand and needed cars. Henry will have 150 cars on-hand Saturday 

night. 

Location North Location East Location South 

On-hand 165 160 200 

Needed 195 160 190 

Based on past experience, the cost to move cars is: 
Between And Cost 

Henry Location North $12 

Henry Location East $22 

Henry Location South $17 

Location North Location East $7 

Location North Location South $28 

Location East Location South $14 


Page 4 of 4 

11. How many cars will need to be moved and what will the total cost of the move be? 

12. Based on all the above computations, what would you recommend to Henry about his 

operation and what changes would you propose (if any)?