Strategic Management: Fermi Problem - Business Efficiency and Analysis

This assignment presents a strategic management analysis utilizing the Fermi Problem to assess the efficiency and revenue generation of two businesses: a valet car wash and a kebab van. The analysis involves detailed calculations of gross revenue under various operational scenarios, considering factors such as working hours, break times, and customer conversion rates. Task 1 focuses on the car wash, calculating revenue with and without break times, and accounting for the number of washing and vacuuming bays. Task 2 examines the kebab van, calculating gross revenue based on production time and the number of kebabs produced, also considering the impact of break times and reduced operational efficiency. Task 3 introduces a coffee shop near the car wash, estimating its profitability based on customer conversion rates and revenue per customer. The assignment aims to demonstrate quantitative literacy and strategic thinking through the interpretation of numeric datasets, the creation of synthetic models, and the extrapolation of outcomes to inform business decisions. The conclusion summarizes key findings and highlights the importance of accurate calculations and assumptions in strategic planning.

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Strategic management

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Table of Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................3
1..............................................................................................................................................3
2..............................................................................................................................................4
Task 2.........................................................................................................................................4
1..............................................................................................................................................4
2..............................................................................................................................................5
3..............................................................................................................................................5
Task 3.........................................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
In the business, there are various decisions that are required to be made and for that, there is
the need to make various calculations. In this there are various businesses that are being
operated and all of the information in relation to them is provided. The decisions will be
taken with the help of gross revenue which will be calculated. In that various concepts will be
involved and this will be discussed for better understanding.
Task 1
1.
In the given case there is the valet car wash which is being operated in a shopping centre.
There is a total of 2 vacuum centres which are involved and with that four hand washing
bays. There are 8 hours in a day and the working days are 6 in a week. The time and sale
value for each activity is provided and the calculations are made on the basis of that which is
represented below:
Particulars Washing bays Vacuum bay Total
Number of centers 4 2
Number of working hours in the
day
8 8
Number of working days 6 6
Total available hours 192 96 288
Time required for each car 0.333 0.167
Total cars that can be washed 576 576
Charges per car 40 10
Total revenue 23040 5760 28800
The calculations are done and it can be noted that the time which will be required for each
wash is 0.333 hours and for each vacuum, it is 0.167 hours. In the available period of one
week, there is a total of 576 cars which can be provided with the service. With the help of
that the gross revenue that will be made is identified (Albarracín and Gorgorió, 2012). It can
be noted that the total revenue is derived to be $28800 and in this, the break time has not been
considered and it is assumed that working will be carried for the complete duration.

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2.
There is a break of 1 hour which is allowed for all the employees and it should be reduced
from the total hours. The operations in the current case are being carried at 75% and all the
calculations will be made accordingly. All the remaining aspects will remain similar but the
operating hours will be modified and with that, the gross revenue that will be made shall be
identified.
Particulars Washing bays Vacuum bay Total
Number of centers 4 2
Number of working hours in the
day
5.25 5.25
Number of working days 6 6
Total available hours 126 63 189
Time required for each car 0.333 0.167
Total cars that can be washed 378 378
Charges per car 40 10
Total revenue 15120 3780 18900
All the calculations are shown in the table above and in that there is the determination of the
operating hours which are determined to be 5.25 per day. It is calculated by deducting one
hour from the total available 8 hours with respect to break. Then 75% of the remaining 7
hours is calculated which is actually the working period. With the help of that, the total cars
which are washed are determined to be 378. This is the total number of cars and the revenue
with them is $18900.
Task 2
1.
The kebab van is operating and it is identified that it provides the service for 14 hours a day
and is open for all 7 days a week. The total hours on the basis of the same are 98 hours and in
that, the kebabs will be produced. The calculations for the identification of the gross revenue
are shown below.
Particulars Amount
Number of hours in a week 98
Production time of kebab 0.083
Number of productions 1176
Number of kebabs in one 6

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production
Total number of kebabs 7056
Sale value of each kebab 10
Total gross revenue 70560
In the given calculation the total period is considered to be operating and there is no
consideration of the break time which is allowed. There are a total of 7056 kebabs that have
been produced and are sold at the rate of 10 per kebabs. By this, the gross revenue is earned
which amounts to $70560.
2.
In this, there is the consideration of break time which is provided. With that, the time which
is available for the production of kebabs will be reduced and there will be less production
which will be taking place in total (Albarracín and Gorgorió, 2012). Below is the calculation
which is provided for the same.
Particulars Amount
Number of hours in a week 91
Production time of kebab 0.083
Number of productions 1092
Number of kebabs in one
production
6
Total number of kebabs 6552
Sale value of each kebab 10
Total gross revenue 65520
It can be noticed that with the reduction in the time there is a reduction in the production level
and total kebabs which will be produced at this stage is 6552 and with that, the gross total
revenue which is made by the business is $65520.
3.
The total time which is available is not always productive and in this case, also there is only
75% of the total time which is productive and will be used for the making of kebabs. This
will be declining the total production and amount of revenue which will be made. The
manner in which calculation will be made is represented below.
Particulars Amount
Number of hours in a week 68.25

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Production time of kebab 0.083
Number of productions 819
Number of kebabs in one
production
6
Total number of kebabs 4914
Sale value of each kebab 10
Total gross revenue 49140
The total gross revenue has further declined and it is because of the reduction in hours which
are operative. With this change, there are only 4914 kebabs that are made. The business is
thus making the gross revenue of $49140 which is less than the other two situations.
Task 3
The coffee shop is present near the wash station and the customers who visit the car wash are
also the customers of the coffee house. It is identified that out of total people there are 60% of
them who visit the café. The selling price of the coffee is $4.50 on which the cost of 30 cents
is incurred. By looking at all this it is considered that the coffee shop will be profitable and so
the same shall be purchased (Hair et al., 2012). The gross revenue will be considered for the
making of the decision and the calculation for the same is provided below:
Particulars Without break With break
Total number of customers in the car wash 576 378
Percentage of customers coming to the coffee
shop
60% 60%
Customers at a coffee shop 345.6 226.8
Revenue per customer 4.5 5.5
Total gross revenue 1555.2 1247.4
In this calculation, the total time which is available is taken into account without considering
the break and by the inclusion of them. Both the aspects are considered and calculations are
made accordingly. It can be noted in the calculation that the gross revenue in both situations
is different due to the difference in available hours. If the break is not considered then the
working hours are more and in that situation the total gross revenue is also higher which is
amounting to $1555.2.
With the inclusion of break, there is a reduction in the available period and total revenue has
also declined with that and reached $1247.4. The calculations show that the profits will be

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made as the amount of cost which will be incurred on the same is very low in comparison to
the same and that will be leading to the final profits. Due to this, the purchase of the same
shall be considered with further expansion.
Conclusion
In the given assignment there are various problems that have been considered and in all of the
various aspects are discussed. It has been identified that for the making of the decisions there
is the need to make the appropriate calculations. In that process, various assumptions will be
made which are to be used and helps in making the correct calculation. The profitability of
the business has been ascertained with the help of that and is useful in making further
decisions.

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References
Albarracín, L. and Gorgorió, N. (2012) Inconceivable magnitude estimation problems: An
opportunity to introduce modelling in secondary school. Journal of Mathematical Modelling
and Application, 1(7), pp.20-33.
Albarracín, L. and Gorgorió, N. (2012) On strategies for solving inconceivable magnitude
estimation problems. In Proceedings of the 36th Conference of the International Group for
the Psychology of Mathematics Education, 2, pp. 11-18.
Hair, J.F., Sarstedt, M., Pieper, T.M. and Ringle, C.M. (2012) The use of partial least squares
structural equation modeling in strategic management research: a review of past practices and
recommendations for future applications. Long range planning, 45(5-6), pp.320-340.