Mms Renta a Car

M02_TURB7293_09_SE_WC02. 1. QXD 12/22/09 238 PM knave 1 W2 operation CASE W2. 1. 1 Part 1 The Intelligence Phase ONLINE FILE W2. 1 THE MMS run CASE MMS Rent-a-Car, base in Atlanta, Georgia, has proscribed permits at study(ip) spreadports and cities byout North America. Founded by CEO Elena lay outum several(prenominal) years ago, it has seen fast growth everyplace the ag ace few years, mainly beca practice session it dischargeers quality service, fast, at favourable locations. MMS is proudly competitive, able to offer political machines at whatsoeverwhat lower rates than its competitors because al virtu altogethery of its airport facilities be located near entirely not at the airport.A keen user of k at marchledge outlines, MMS tracks competitors damages, stored in a large selective information w arhouse, finished its Web-based enterprise information system portal, CLAUDIA (Come Learn About statUs for Deals and breeding on Autos). CLAUDIA as well tracks sa les, wither status, saucy(prenominal) privileged status information, and external information nigh the rescue and its relevant components. CLAUDIA has been a great success in keeping MMS competitive. The First Meeting Elena calls the run across to diffe involveiate ELENA Thank you all for coming on such short notice. Im glad that we could account this see through our naked as a jaybird scheduling module of CLAUDIA.I receive you pee all read my email more or less our latest troublesales atomic number 18 off by 10 part. Basically, this pass on put dismantle us in the red for the year if it march ons for opposite 4 months. CLAUDIAs forebode system that cerebrate to our RMS (r fifty-fiftyue management system) indicates that sales will continue to lower for the next 4 months, regular after we align prices. Folks, whats going on? I involve to roll in the hay what has caused this trouble, how we freighter fix it, and how we fag thwart it from happening again. Aside from solving the paradox, I indirect request to develop almost knowledge close it and use it as an opportunity to improve our pedigree.MARLA Frankly, Elena, I assumet understand it I noticed a slight dip in sales 2 months ago unless was so busy with our refreshful wither acquisitions that I planned to go hindquarters and flavor into what happened when I finished replacing the fleet later this week. I should fuddle passed word on to our analysts to arouse a weigh screen then. Sorry. ELENA No problem, Marla. I should pick out noticed it myself. Im glad you were at least aw atomic number 18 and posit to bm on it. So, we wear evidence of a problem. What else do we start? S HARON My up-to-date reports from the strike industry indicate that over the noncurrent 6 months in that location has been a slight increase in businessProblems Elena has called a marching of her vice presidents to discuss a problem that she noticed yesterday while tapping into CL AUDIA. Rentals argon off nigh 10 percent nationally from the MMS projections for last month. Further more(prenominal), CLAUDIAs forecasts indicate that they will continue to decrease. Elena wants to know wherefore. This morning, the following(a) VPs be present Sharon Goldman, market (CMO) Michael Lee, Operations (COO) Marla Dana, Fleet Acquisitions (CFAO) Tonia van de Stam, Information Systems (CIO) separate Lams, Knowledge Systems (CKO) Jelene Thompson, Accounting (CAO) Rose Franklin, Finance (CFO) 2-1M02_TURB7293_09_SE_WC02. 1. QXD 12/22/09 238 PM Page 2 2-2 Part II Computerized last book overall. More people be flying for business meetings, conventions, trade shows, and pleasure. And the same proportion of them is reading simple machines in North America. This is true for all of our elemental markets study cities and airports only not for our petty(a) markets in the dispirited cities, where most rentings argon for business. Overall, business should be up. spen d business is up quite a frolicction from the central Florida theme position denote specials and major conventions. Both political party conventions were held in major cities. entropy indicate that our rentals did not increase while the caperdamental market did. Our earlier forecasts indicated that business should abide change magnitude our rental rates reflect this, as does our change magnitude fleet size, by 15 percent. The cars should be pitiful simply theyre not ELENA How around the ad impacts? ROSE Our financials indicate that we take for been spending more on advert in our primary election markets. so far those atomic number 18 where our sales be dropping fastest. JELENE I agree. Though our records were about 3 weeks behind, now they atomic number 18 up-to-date, and theyll stay up-to-date, thanks to our call forth to CLAUDIA.Im face at the current info decently now on our secure wireless net plump, and were un incertitudeably down. ELENA Okay. Our ad expenditures are up. Thats because we do that proceed with GMC (Gold Motors Corporation). We skilful finished replacing our entire fleet with GMC cars and vans, slump, Marla? MARLA Absolutely The cars are much more steady-going and cheaper to maintain than the ones that had the transmissions burning out every 45,000 miles (72,000 km). These cars and vans are the national best-sellers, have great reputations, and are of high quality. They have the highest safety records in most categories. solely of the standardized whole kit and boodle came in origin sub promotes, compacts, mid-size, full-size, and minivans. About 6 weeks ago, we started acquiring in the hot clean GMC bird of passage 1600 convertible. We have an exclusive deal on this hot atomic number. It looks like the sporty 1971 Fiat Spider but is make to new quality standards. Its fun to drivethey let me have one for a year forwards we got the fleet in They are expensive, and GMC owns the domestic market. We shou ld be able to rent these out all the sentence. We have 5 at distributively agency across the country, and by years end we should have 10.SHARON We got an exclusive with them for the next 3 years. They only give the fleet discount to us, we swash their cars in our advertising, and they feature us in theirs. And the Spider came to us right off the new congregation line in Pittsburgh. ELENA I have one of the Spiders, too. So I suspect that theyre eternally rented out, arent they? MICHAEL Well, no. Only about half(prenominal) of them are rented. The rental rates were pretendd to be set pretty high, but our RMS recommends setting it at the same price as a compact. We hedged a minuscule and set the price to about 10 percent higher.Some local anesthetic agency offices are overriding the system and setting the prices 15 percent less, and they allay cant move them. ELENA How about the other classes of cars? MICHAEL Rentals are down about 8 percent nationally on all the other ones. E LENA So sales are down 8 percent for everything but the Spider, and the Spider, which should be a hot seller, is off by 50 percent. I know from CLAUDIA that our inventory is okay. All the new cars came in on schedule, and we were able to sell the used cars by dint of electronic auction sites and carmax. com. Folks, we definitely have a big problem.M ICHAEL As COO, I see that this is principally my problem, though all of you here are involved. Weve never had this happen before, so I authentically forefathert know how to classify the problem. exactly I telephone we can tie at most of the information we contain. This situation is only a sign of the problem. We engage to identify the cause so we can correct the problem. I want slightly time to get my analysts and Tonias moving on it. I will look at well-nigh major stand by from Sharons people, M02_TURB7293_09_SE_WC02. 1. QXD 12/22/09 238 PM Page 3 Chapter 2 finality Making, Systems, Modeling, and have 2-3 and probab ly a bit from everyone else.Sharon and I blab outed before the meeting. We both have a legal opinion that there is something unconventional with how we are merchandising the new cars, but we dont have full information only when yet to identify it. I hope that in one case we solve this problem, well have a nice piece of strategic knowledge for Mark to put into the knowledge management system (KMS). Ill tentatively schedule a meeting through CLAUDIA next week, as close to this time as possible, depending on peoples previous commitments. Ill e-mail the major results as we go. Im sure well know something before the next meeting. ELENA Thanks, Michael.Okay, folk music We know we have a serious problem. Weve seen its effect. Michael will assume ownership and move ahead. I also want our IS analysts looking at info even before allone requests them. That includes any weird economic trends or eventsand look at the underlying structure and parameters of our forecasting models, okay, Tonia? Sharon, you look into the advertising. See if there are any external events or trends or reports on the cars that could be active our rentals. The RMS has been accurate until now. Its been able to balance price, supply, and imply, but something happened.Thank you all and have a great day. APPLICATION CASE W2. 1. 2 Part 2 The propose Phase Later on the day of the archetypal meeting, Michael Lee has his top analyst, Stephanie Elberson, look into what world power have happened. Michael recognized that it was too early to start looking into criteria, solutions, and more (he had studied termination making in a DSS course in his MBA program). He was still trying to understand the problem and separate the problem that could be polld from the symptoms. He wanted to touch the connection between the two, but he felt that something was fundamentally wrong, and CLAUDIA could ot identify it. A heavy decision maker relies on judgment and has a good feel for what makes sense and what does not. Michael is one of the best. Stephanie put unneurotic a police squad of analysts and started formulating areas to investigate. One member of the group, stop Frank, worked closely with Sharons analyst, Phil Abrams, to establish the accuracy of the forecasting model. Amy Lazbin, on Stephanies team, looked into infobases of operational information functional internally and economic information available through subscription services. The latter info focused on the railway car rental, automobile, and general economic areas.The summary team initially set the data mining tools on automatic pistol to establish bloods in the data. For the most part, Amy was able to roll most of the relationships and assumptions that were already in the forecasting models and the RMS. vigor new popped up from the artificial neural networks, thumping analysis algorithms, and statistical regression models. The pricing model and the forecasting models were all right, though there w ere some new fluctuations, and the errors were higher when the team looked into how well they had performed over the past 2 months as this new problem arose.The team noticed that the neural networks outperformed the regression-based systems a bit, so they set up an information system and marketing assembly to look into how they could improve the regression-based models with neural networks. (This was a new opportunity, which led them to return to the intelligence chassis with a new set of issues. ) Stephanie was puzzled. She met with Michael 2 age later to discuss what she was going to do next. She also invited the marketing team and the IS team to each commove someone to the meeting. Phil Abrams and Marina Laksey (from IS) joined the team at this point.The meeting was held in the electronic meeting center (EMC), where they would be able to analyze data and use the conclave support system (GSS). heres how the meeting went STEPHANIE Thank you all for coming today. As you know, we are working hard on the problem or kinda the symptomsto try to get to the heart of the problem. Data mining tools helped M02_TURB7293_09_SE_WC02. 1. QXD 12/22/09 238 PM Page 4 2-4 Part II Computerized termination Support a bit, but there is something fundamentally wrong, and we have yet to find it. whatsoever ideas?MARINA Stephanie, we used the data mining tools and looked at most, if not all, of the data we normally look at. And we usually look at standard views through our spreadsheet-type interface. I know we have to look outside the box. First off, the foursome of us contend to fire up our new, efficacious OLAP (online analytical processing) software, DOT (Data on Time). It taps into our data warehouse and other data, but it goes beyond data mining by allowing us to poke about in the data. We bonnie got the software in 2 weeks ago, and I have already gone through the training course.It has many of the features that CLAUDIA has, but it allows us to look into multidime nsional data from any of our data sources in any slice we choose. It also lets us linkup into other databases and data marts like the one that marketing has. Let me start it up PHIL I agree. I learned how to use the OLAP software on my own, and Ive developed some interesting views of our marketing data that show relationships we did not believe possible. The graphics are almost automatic. Lets try it The team saw the bumps in the data but had no idea what had caused them. At least they could see them.When they tapped into the advertising plans, they noticed a slight inverse relationship with sales and advertising. When they asked Phil about it, he said PHIL gross sales dropped 2 weeks after our new jointmarketing campaign began. We severely advertised the new cars. Every national and local TV commercial prominently displayed the Spider. We have data on that in our marketing databases. I know you dont normally look at that. Here, let me bring them up. Hmmm We show how much air tim e each commercial played where, and what was in them. Let me do a little disappearance and aggregating here. Aha I see. We are mostly advertising the cars nationally.Sales are very light-headed in primary markets, but theyre also a bit weak in supplementary markets. Ah Ah Ah One problem we have is distribution. We have over half the cars in the wrong places. We need to move all the Spiders from the secondary markets to the primary markets. But I imply we have other problem The pricing, supply, and claim data that we are development to predict rentals dont make sense. The car officially has an insurance back seat, so it is a fourpassenger car. But youd be lucky to get a carryon suitcase back there. Since we didnt have data on it, someone in our stem entered it as a four-seat compact with two doors.The system thinks it is a car ideal for a small family or a single businessperson on a budget. These rent well in the middle west in the secondary markets but badly in the conventi on areas, where there are men who are going through their midlife crises and single women who like to rent sporty cars. We have a lot of analyses to do here on where we are advertising what. Im not sure who rents what where, but I suspect that we can target our ads better once we designate our market clusterslike males in Nebraska, 45 years old, traveling to San Diego for trade conferences.We have the data we just need to apply them better. MICHAEL Hold on. to begin with I start moving cars around, we need to analyze this a bit more. Weve never had a car like the Spider, so we need to investigate its properties and which categories of clients would ideally want it. Part of the solution jumped at us. But what are we trying to do? If I think up correctly, a few years ago we ran a try before you buy promotion in conjunction with our previous car supplier. quite a little could rent our excess stock on our off-days for half the rental rate for up to 3 days.If they bought the car from a dealer in the area, they got the rental price back. If not, they had fun with the car. It worked well. We noticed that people who liked the car they rented had a tendency to rent them again, especially in our primary markets. We have a lot to look into. I want to recap what we have. We know that our goal is to maximise net profit. This is clearly our principle of choice. We need to keep abreast up with criteria that describe the impact of alternatives and determine how they coin our bottom line. Our RMS sets prices so that we can ideally do that.We have some errors in our marketing database we must(prenominal) rethink how we advertise and how we distribute our stock. Okay. Ill meet with the VP team in a orthodontic braces of days. Im going to e-mail them information about what weve uncovered and where to M02_TURB7293_09_SE_WC02. 1. QXD 12/22/09 238 PM Page 5 Chapter 2 Decision Making, Systems, Modeling, and Support 2-5 find the data. First Ill talk to Sharon so she can get busy with some ideas on marketing. At a Meeting 2 Days Later Same Place, Same People S TEPHANIE Good morning. Those of us in the trenches think weve got it Heres whats going on.We have several problems, each of which we have developed some alternatives for. Were going to discuss what we think are the best ones for each situation. Some we can practice right away others will take some time. Lets start with our objective to maximise profit. Our principle of choice is profit maximization. This part of the problem was easy. Our RMS recognizes this and adjusts prices automatically to maximize profit on an yearly basis. on that point are some errors in the price elasticity curve for the Spider, but, in general, the real question now is how to manage lease.Our advertising influences demand, as does our inventory. We need for the right product to appeal to the right customers. There are many criteria that we need to measure, from quality to pretense to size, and customer service, car a vailability, and so on, in term of how they affect rentals. We are doing this, but need to do a better job of it in distinguish to track our rentals. We have a team analyzing this right now. In a few weeks, they will have some concrete recommendations for system upgrades to the RMS. Our symptoms indicate the following real problems and alternatives, among hich we can choose Data accuracy. We need to change the profile of the Spider from a compact to a sports car. We need to develop the RMS profile from what little data weve got. Fortunately, we can tap into market data that our faculty consultants at the University of Georgia (UGA) have garner for us in their research. One of the faculty members drives a Spider as well. Inventory imbalance. We have done some analysis to determine what the real demand for the Spider is, how it affects the demand for other cars, and vice versa. We built an optimization model and solved it. Based on our urrent advertising, we have determined that by moving about 15 percent of our fleet around (and not too far), we can take care of most of the demand imbalance. We recommend moving all the Spiders from secondary to primary markets right away. We also want to move some of our minivans and full-size cars around. Later, we can adjust advertising to push some secondary market demand. advert imbalance. We advertise where our customers are, but they rent elsewhere, and for different reasons. We need to do a better job of identifying customer homes to determine what to advertise where.Our analysis shows rentals are off partly because we indicate that we have the Spider. Young to old men and single women want to rent it, but we stock out where they are going. For example, we discovered that middle-aged men and women from the Midwest rent compacts in the secondary Midwest markets, but those in the primary markets on the coasts want to rent the Spider. We are still analyzing effects like this and should be able to complete the work i n about a week to determine how to realign our advertising efforts. Try before you buy. This truly is an opportunity, not a problem.When we saturate Spider demand in primary markets, we should get some especial(a) Spiders in the secondary markets and reestablish the try before you buy campaign. This car will be a real boon in this effort. Sharons group has already established a cooperative obligation with GMC. Theyre interested, and it should boost our gainfulness on these cars by 18 percent. Discount intervenes. We discovered that many customers called or got on our Web site to rent the Spider. When they set up out that we didnt have one for them, rather than rent a different car, many were so annoyed that they rented a car from one f our competitors, usually a Toyota MR-2. This happened in almost all of our primary markets. In our secondary markets, people in reality didnt want the Spider but sort of wanted full-size cars. Because our advertising features the Spider, t hey forgot that we rent other cars as well. Actually, we forgot to remind them. Our advertising is backfiring on us. We should at once M02_TURB7293_09_SE_WC02. 1. QXD 12/22/09 238 PM Page 6 2-6 Part II Computerized Decision Support discount substitutes for the Spider until we get the Spiders in place next week. Florida theme park demand.We have a unique opportunity here. Florida theme set have been advertising heavily in atomic number 63 because the euro is strong relative to the dollar. We must increase advertising in Europe either with the theme parks or separately. Phil is confident that we can run a joint campaign. Marketing will look into this and how we might be able to get customers to pay in advance in euros. To do this, we may need to move minivans to Florida from as far away as Tennessee. What it boils down to is that we want to be more rapacious in balancing our stock to meet demand and tie this into the RMS and advertising.We also want to refine our advertising mode l to handle new types of cars, like sports cars, and update demand data more frequently. Michael, this is what we want to present to the VPs on Monday. Is that okay? MICHAEL Perfect We have determine the real problems and have good alternatives. I really appreciate the completed staff work. If this all works out, the end-of-the-year bonuses for this team should be excellent. Lets go have lunch Im purchase APPLICATION CASE W2. 1. 3 Part 3 The Choice Phase Mondays Meeting With All Vice Presidents, Stephanie, and Her Team ELENA Thank you again for coming.Stephanie, Michael tells me youre on to something. Lets hear what you have to say. STEPHANIE Well, we think weve discovered what to do. But first let me outline what the real problems are and some suggested solutions and why these are appropriate solutions. Next Stephanie essentially outlines the inside information from the meeting described in Part 2 of the Running Case. There is a little banter to clarify a few points ELENA Amazi ng. Im glad Mark recommended acquiring DOT 3 months ago. Though expensive, its already paid off. open fire you get me specifics on the bottom line for each alternative? STEPHANIE Not accurate ones for each just yet.Some will take up to a yoke of weeks. We do have estimates on all of them. Here are the results in my PowerPoint presentation. ELENA Hmmm. Okay. I want those data on the Spider updated immediatelyand some of them locomote to where theyll rent. MARLA Its already done. I took steps right away once Michael told me what happened. After all, its my responsibility. I already gave some updated data to IS. Theyve adjusted the RMS. precedent data indicate that they have improved our profitability already. In a couple of markets where it was relatively inexpensive, I have moved some cars around based on the DSS models recommendation.It worked I think we should make the major changes recommended by the solution to the model. My estimates, just from these few markets, are that it will work just as the model predicts. SHARON Were looking into how to dispose our marketing and tie it into the RMS. Were also running game models on how European marketing should work. Well know in a week what to do. ELENA Excellent Heres where we stand. Were going to adjust the profile data of the Spider and all models frequently, move cars around, and discount substitutes until we can get the imbalance fixed.Well decide on what to do about the other issues after the rest of the analysis is completed. M02_TURB7293_09_SE_WC02. 1. QXD 12/22/09 238 PM Page 7 Chapter 2 Decision Making, Systems, Modeling, and Support 2-7 APPLICATION CASE W2. 1. 4 Part 4 The Implementation Phase The implementation of the first couple decisions was relatively easy. Transport vehicles were rented, and cars were moved. Discounts were easy to establish for substitute cars because this could be done as routinely as when there was a normal stockout.A customer would first be offered the opportunity to upgra de. If the customer turned it down, the upgrade would be offered free. This worked 95 percent of the time, even in the case of the Spider. Sales were up, and the company was projected to be profitable with these small changes. Elena got the results of the additional analyses. They all made sense. She decided, with the advice of her VPs and the analysts, to go ahead with all the recommendations, but she held back on European marketing until a mien in Europe could be established in major markets.The try before you buy campaign would be started once there were 15 Spiders in each of most of the major markets and 3 in each secondary market. She also approved adding new data and features to CLAUDIA. When the advertising effort was refined and buttoned to the RMS, profits soared. Every member of Stephanies team and all the VPs involved got a generous end-of-year bonus, an extra weeks vacation, and a gift of a free GMC Spider. SUMMARY AND CONCLUSION MMS ran into new problems when it chang ed its fleet.CLAUDIA was not equipped to handle new cars that were unlike others from past experience, and it did not track events as well as trends. Simons (1977) four stagecoachs of decision making, along with feedback, were followed, even though the problems were not really identified in the first phase. Successful problem solving was at last accomplished using Web-based DSS. Case Questions 1. What is meant by a symptom versus a problem? Relate these ideas to the case. 2. why is problem ownership so important? 3. til now though the problem was not identified at the end of the intelligence phase, what was? . How was the design phase performed in this case? 5. The choice phase seemed like a combination of design, choice, and implementation. Is this a problem? 6. The implementation phase seemed to involve elements of all the phases. Is this a problem? 7. How were new problems or opportunities handled as they arose? 8. Why do you suppose some alternatives were either modified or p ostponed? informant This fictional decision-making case is loosely based on several real situations. Thanks to Professor Elena Karahanna at the University of Georgia for inspiring it.