D & C Car Wash

CASE 4: D & C WASH SERVICES BJMP 5023

OPERATIONS AND TECHNOLOGY MANAGEMENT Page 1

Discussion Questions

1. How might the strategy, mission, competitive priorities, and customer

benefit package of this business affect their technology decisions?

The D & C Car Wash starts up the business with an idea of providing

superior customer service where customer can enjoy a premium car

washing experience.

Therefore, they need to understand the technology to be used in their

business because it neither managers nor employees can do their jobs

successfully without it and furthermore, the application of technology to

specific business needs is often viewed as a key component of the

business strategy.

If their mission and strategy are to provide premium car washing

experience to customers, and they emphasize on quality but with lower

cost charges to customers, they must look for a technology which can

offer premium car wash experience to customers and customer can

satisfy with the quality of the service. Whether they want to invest in the

expensive machine or not will also depend on the initial cost they would

like to invest.

The customer benefit packages also can affect their technology decision.

They can purchase the expensive machine which can offer variety of

services or variant to customers or they can just purchase a simple

machine which can only offer primary services to customers.



2. What issues and problems should be anticipated with managing this

business, particularly with respect to technology? What roles does

operations play in successfully handling these issues and problems?

Issues and problems that should be anticipated with managing business,

particularly with respect to technology are:

a. Higher employee skills level required such as information technology

and service management skills.

b. Integration of old (legacy) and new technology and systems

c. The machine that they use to wash the vehicles is breakdown and

part shortages will impact the performance of their car wash to give

a superior service to their customers. When the demand is high and

the machine breakdown, they cant give the service to customer

and they will loss.

d. The maintenance of the machine and robotic that they use. If we

use the high technology machine, the maintenance also always is

high. That means it will increase the cost of maintenance.

To solve these issues and problems, operations:

a. There have been advancements made in water treatment; car

cleaning chemicals, and nearly every aspect of car washing has

made major advancements from the ground up. This will reduce

time for car wash services.

b. Successful car wash operations make use of remote equipment

monitoring software programs that can send a text message or ring

a pager when an equipment failure occurs or if soap levels drop

below a preset level. Wash operators can expect to make more



money with reduced down times and increase the life span of their

equipment by catching malfunctions early on before they lead to

major repairs.

c. Carwash operators can save time by utilizing the flexible and

increased throughput capabilities of new carwash equipment

designs, including man/machine communication interfaces.

d. Increasing car wash efficiency and the mode of how the owner

interface with the machinery on a daily basis can directly translate

into time savings. Although not completely related, these time-

saving tasks translate into net cost decreases.

3. What does a break even analysis indicate about this business venture?

Should Drew and Caroline go into this business?

Break even point is the level of sales where profits are zero. Therefore the

break even point can be computed by finding that point where sales just

equal the total of the variable expenses plus fixed expenses and profit is

zero.

Forecasted Revenue for typical modern car: $22 X 20,000 cars = $ 440,000

Operating costs

Chemicals and Utilities $ 30,000

Sludge Removal $ 4,000

Maintenance, Insurance and Advertising $ 12,000

Accountant, Attorney and merchant fees $ 6,000

Labor $ 170,000

Office expense including telephone, photocopying etc $ 6,000



Mortgage $ 72,000

Car damage expense (0.008)*($22)*(20,000) $ 3,520

Total Operating costs $ 303,520

The breakeven number of cars:

Assuming x = number of cars required to breakeven

22x = 1.50x + 0.176x + 270,000

20.324x = 270,000

x = 270,000/20.324

x = 13,284.78 cars

x= 13, 285 cars

Net Profit = Forecasted Revenue Operating costs

= $ 440,000 - $ 303, 520

= $ 136,480.00

Since the company only requires 13,285 cars to breakeven, it is advisable for

Draw and Caroline go into the business. Furthermore, based on the average

number of car of 22,000, it is expected that their company can make profit of

$136,480.

Prepared By:

GROUP MEMBER MATRIC NO

YOSMAN BIN HUSSIEN 804020

NORANIDA DAUD 805491

MOHAMMED ABDULWALI AL SAMAWI 801203

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D & C Car Wash