Essay About Capacity Utilization And Premium Price

Economics 6300 Hertz Simulation Report
Simulation Report
As much as I enjoyed the simulation, I believe that it is safe to assume that I am not
interested in a career in the market strategy for Hertz. I went into the simulation with
expectations as to how I would perform, and there were times where I surprised myself. The
simulation was based on an idea that we would experience several different market demands,
strategies from competition, and financial challenges. I felt like I could often drown in all the
data and my results showed that very thing. If you have too narrow of a focus when creating a
strategy, you will focus on factors that will not necessarily lead you to a successful result. I
believe this was the biggest lesson that I learned during the simulation and class.
Throughout the simulation, the cornerstone of my strategy was based on capacity
utilization and price manipulation. I wanted to have my largest fleet running at 80% capacity
utilization or greater at a premium price. I would compare months with historical data to make
sure that I had enough cars in any given region, all the while making sure that I could account
for the market demand. This was important because I felt that if I could run at above 80%
capacity utilization, I was able to turn a profit as long as I was aware of the operating costs. On
every run, I would often find myself manipulating the cost per vehicle rented to try and
establish a point where I could significantly manipulate the capacity manipulation number
above the 80% threshold goal that I had set for all of the markets. I would often find the ceiling
of what consumers are willing to pay in any given month and run an analysis to predict what I
should set the price at in the next month. I would go further into my price analysis as the
months progressed. For instance, moving cars from Tampa where the customer was unwilling
to pay a premium to Orlando where I could have a much larger capacity utilization percentage
would equate to a larger number of net sales. The below data shows that every time there was
an increase in unfilled orders, I would respond by price manipulation