Home Depot has rental centers available nationwide. To make renting tools easy, they offer a one day and five day rental for a floor sander to refurbish hardwood floors. This makes for competitive prices so that the one day rate is $45 and the five day rate is $35 per day. The number of such sander rental average per day at the $45 rate and 4 per day for the $35 rate.
When these floor sanders are brought back to the store after a rental, they must be checked to see if they need to be repaired. If they don?t need to be repaired, they are set aside for cleaning only. If they need repaired, the repairs and cleaning are completed in the repair area.
Cleaning only cost $10 while those units going to repair cost $100 for repair and cleaning. On average about 20% (of each rental type) need repairs. In addition, it is unknown that there are about 25 sanders on average waiting for cleaning. Those sanders in the repair area spend an average of 10 days there. (assume everything is at steady state)
1.What is the inventory, the throughput, and the flow time for each 3 parts of this rental (customer, cleaning, and repair).
2. What is the profit per day?
3. If the time in the repair area could be cut half to 5 days, what improvement in profit would result? What other benefits will result from this change? What is the most likely way to achieve this 5 day time period?