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NYC taxi case Interviewer- L ed 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.

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nyc taxi case interviewer l ed case interview
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.
question 1 request information
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
question 1 request information1
Question 1Request information
  • Interviewer gives requested information
  • Profits = Revenues – Costs
question 2 stay at laguardia
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

question 2 drive around manhattan
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

question 3
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…