BLING MAX BUSINESS SIMULATION CASE

QNT 5160, Fall 2015 Semester

Updated 8sep15

Bling-Max

TouchFree Carwash in Fort Lauderdale, Florida

Profs. Yurova, Griffin, Hoyte

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 Bling Max Car Wash
Bernard Bernie West stood under a tall palm admiring his new business and the many vehicles
entering it on a sunny Florida day. Bernies Bling-Max Carwash had exceeded his expectations as a
small service business among many similar enterprises in Fort Lauderdale. Owned and operated by 32
year old Bernie, he had purchased the business outright about six months ago, borrowing against his
house 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, restaurants, 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 Bernies market research, the prices are slightly high but still competitive,
compared to other automated washes. More important than pricing, he knew he had to do
something to reduce wait times to keep customers from going elsewhere.

Bling-Max is open 7 days per week, 365 days per year from 8:00 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 queue 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 reach the control panel at the wash entrance, providing it is before 6:00 PM closure. At 6:00
PM the control 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 and wait time problem, Bernie
gathered random sample data at various times of day and on different days, recording timing of
customer arrivals entering the corral and what wash service they ultimately picked. The wash
process times (Service Times) for the Economy, Custom, and Deluxe washes are 6, 7, and 8
minutes respectively, which includes credit card swipe, entry, and drive-off times. Since these three
times are predominantly controlled 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, and 8 min.). The customer Inter-Arrival Times (IAT)
and selected wash services are shown in the Excel file Q1 Raw Data Worksheet.xlsx.

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With six months financials completed, Bernie is confident that all-in costs (utilities, maintenance,
chemicals, advertising, etc.) are 35% of revenues. Since customers are balanced between offices and
shopping during the week, and restaurants, bars, and shopping on weekends, there seems to be little
variation from day to day or 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 robotic wash arm, so the vehicle stays put
after the wash and wax cycle and during the one minute drying cycle. Bernie has found like-new
blow-off equipment at an industrial distributor and it is ready 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 investment of
$11,500, complete. This would de-couple the one minute drying cycle from the wash cycle, speeding
up the service process by one minute per car, no matter which wash they chose. As a car finished
the wash cycle it would move forward toward the exit to get dried off. This investment would
separate the wash and dry-off cycles, reducing all wash cycles by 1 minute and allowing the next
customer to enter one minute earlier than before, thereby improving 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 times and lines would be improved, nor whether the investment is financially
justified. He could reduce average process time just by selling 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 selection and related pricing adjustments, as well the merits of investing in 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 about 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 he look for alternative improvements, or can he risk
a big loss of business if he does nothing?

Bernies brother Craig has an automated car wash in Georgia. Craigs wash has four wash selections,
consisting of Bernies three washes plus a higher-end Elite wash using Rain-X brand glass
treatment chemicals from a special dispenser that costs $8,000 and adds 1 minute to the Deluxe cycle
time. Having run periodic specials Craig has given Bernie data on the relative popularity of the four
levels of washes based on price. Bernie is considering further investment 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 Druckers wisdom as he ponders his next steps: Efficiency is doing
things right and Effectiveness is doing the right things, coupled with the key question What does
the customer most value?

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 Bling Max Case Assignment Instructions

Put yourself in the position of a management consultant helping Bernie with his business
improvement decision. Organize your approach as follows:

1. Analysis of Raw Data: Fit and describe the distributions represented by the IAT (inter-arrival
times) and customer-selected services data in 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 situation 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 the model to reflect the improved cycle times from the
new blow-off. Enter the Q3 output data into Table 1.

4. New Blow-off + 4-washes with Pricing a: Save-as your completed Q3 Simulation Worksheet
using file name Q4 Simulation Worksheet. Update the model to reflect the improved 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 improved 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 scenarios. What business decision would
you make and why? What are the implications from the standpoint of business performance and
from customer perception and retention?

Follow the guidelines found on BB in the Format of a Management Report and the Grading Rubric
when writing a 4-5 page (body) report. Place Table 1 and output charts in your report Appendix
section and use the model output to justify your conclusions and recommendations.

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