## Problem Definition

If you have ever been in Bangkok, you would have noticed these motorcycles transporting people from A to B as an alternative means of transportation. These motorcycles typically transport people on short distances such as nearby train stations, supermarkets or food stalls.

Your job is to estimate how much **profit** a motorcycle can generate in a month’s work meaning that you have to **estimate both revenue & cost** to be able to estimate profit.

## Comments

Since this is a candidate-led case, the candidate should drive the case from start to finish.

This is a fairly simple case, but candidate will receive a **lot of info & data verbally**, so the case is meant to test a candidate's **ability to remember** info & data provided verbally and if they can summarize it and use it.

This case also helps the candidate to **practice note-taking** & listening effectively.

## Short Solution (Expand)

## Detailed Solution

Suggested case structure:

- First, candidate should explain his approach by saying that he wants to estimate revenue first, then costs and then profits.
- If candidate isn't familiar with the country or business, he should ask questions to get more information or data.
- The candidate should also think about the data or information he needs to calculate profits.

### I. Background

To start the case off, candidate should ask for more **background information** on this motorbike business. If he already knows about it, he should still ask for background info so he doesn't make any wrong assumptions.

**Background information that can be shared upon request:**

**Each motorbike-driver is**

**assigned to a station**from which customers are served. Each station has**5**drivers. The motorbike delivers the passenger to the destination, then**drives back empty and waits his turn.**This is done so that each driver transports the same number of passengers as part of a**fair distribution system.**A driver can therefore only**benefit from morning rush**or**evening rush**depending on his/her location. If a driver's station is nearby an office building for example, they only benefit from the**evening rush.**Most rides take about**10 minutes**and are between home/office and metro-station or home/office and nearby restaurants.

**II. Analysis**

**Candidate should ask for data & information to calculate revenue & costs. Below is the information that can be shared upon request:**

**Working hours**

**Each driver works**

**14 hours**a day from**06.00 AM to 08.00 PM.**Drivers work**7 days a week.**On**Friday & Saturday night**, drivers work until**midnight**to benefit from entertainment traffic.**Lead-times**

**Each ride takes about**

**10 minutes**including the empty return-drive to point of pick-up/assigned station.**Rush hours & capacity**

**Morning rush-hours on weekdays are from**

**06.00 AM to 09.00 AM**- drivers work at**100% capacity**. No need to wait in line. Evening rush-hours on weekdays are from**05.00 PM to 08.00 PM**- drivers work at**100% capacity**. No need to wait in line.**Off-peak hours**on weekdays and weekends drivers work at**50% capacity**due to limited demand. Rush-hours on friday/saturday-nights from**08.00 pm to midnight**, drivers work at**100% capacity**.**Remember that driver benefits only from morning or evening rush, not both. If a driver benefits from morning rush, his/her evening rush is similar to off-peak hours, so operating at 50% capacity.****Revenue**

**Each ride costs $0.50 cent.**

**Costs**

**Monthly installment payments are $30. Monthly permit fees are $50. Monthly gas expenses are $100.**

**III. Analysis**

**Calculating number of rides:**

**Assuming our driver benefits from morning rush hour, we can calculate the number rides during:**

**Peak-hours on weekdays. Off-peak hours on weekdays. Peak-hours on weekend-nights. Off-peak hours on weekends.**

**With this formula we can calculate number of rides for one week for each time-segment. **

**Share Table 1 with candidate if required.**

#### Calculating total monthly revenue:

Total rides per week:** 387 rides. **

Total rides per month: **387*4=1,548 rides.**

Total revenue per month: **1,548*$0.50=$774**

#### Calculating total monthy cost:

Installment fee+permit fees+fuel costs=**$30+$50+$100=$180. **

#### Calculating monthly profit:

Profit=Revenue-Cost.

$774-$180=**$594.**

## Difficult Questions

- Would you consider the total profits as a realistic number?
- If yes, why?
- If no, why?