NYC taxi case Interviewer- L ed Case Interview

# NYC taxi case Interviewer- L ed Case Interview

## NYC taxi case Interviewer- L ed Case Interview

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##### Presentation Transcript

1. NYC taxi caseInterviewer-Led Case Interview • You are a taxi driver at LaGuardia airport in NY • You have two options • Option 1: Stay • Wait in the taxi queue for 2 hours. Pick up a customer. Drive him/her to Manhattan. • Option 2: Leave • Drive back to Manhattan. Look for customers in Manhattan.

2. Question 1Request information • “What information do you need to make your decision?” • Read: What information do you need to calculate which option is more profitable? • Profits = Revenues – Costs

3. Question 1Request information • Interviewer gives requested information • Profits = Revenues – Costs

4. Question 2Stay at LaGuardia Revenues Costs Toll = \$3 paid by customer Fuel = 24 miles / gallon on the highway 12 miles  0.5 gallons 0.5 * \$2 / gallon = \$1 Medallion Fee = \$26 * 50% = \$13 • 12 miles from airport to Manhattan = 1 * \$4 + 11 * \$2 = \$26 + Tip = \$26 * 1.15 = 29.9 ~ \$30 Profits = 30 – 13 – 1 = \$16

5. Question 2Drive around Manhattan Revenues Costs Toll = \$3 Fuel = 24 miles / gallon on the highway 12 miles  0.5 gallons 0.5 * \$2 / gallon = \$1 Fuel = 12 miles / gallon in Manhattan 24 miles = 2 * \$2 / gallon = \$4 Total Fuel Costs = \$5 Medallion Fee = 6*\$6 * 50% = \$18 • 10 min between trips • 12 miles per hour  2 miles in 10 min = Average trip • 3 customers per hour * 2 hours = 6 customers • 2 miles = 1 * \$4 + 1 * \$2 = \$6 • + Tip = \$6 * 1.15 = \$6.90 • 6 customers * \$7 = \$42 Profits = 42 – 18 – 5 – 3 = \$16

6. Question 3 • What else would you consider besides profits? • Think outside the Box Risk • Staying at LaGuardia poses no risk and steady reward • Going back to Manhattan is risky but could yield higher return – What if he/she has 7 customers? 5? Economic Implications • From an economic perspective, returns will always be the same • Equilibrium condition • If the return is higher at LaGuardia, the queue will get longer and the return will fall to the point where returns are equal Exceptions (Factors that change demand) • Rain, rush hours, special events, holidays…