Wizard Of Avis Case Study

9951 Words 40 Pages
Register to read the introduction… The pilots considered unionizing, and the company wanted to show them what they could reasonably expect in career earnings and types of aircraft to fly. The problem was formulated as a multiperiod, multi-stage stochastic (Markov chain) transition model. The OR team used fleet and operating requirements for a decade or more in the future to lay out pilot requirements by aircraft type for each period. The characteristics of the existing crew complement served as the starting point. The model then simulated the movement of each pool of pilots in a given class through these periods. Statistical data was used to determine the probability that a pilot would fail a medical examination, fail to upgrade, accept a job with another company, and other events that could affect his transition from onie state to another. each city station bought or leased its own equipment and ran its own phone system. Moreover, station managers jealously guarded their control over the process. "Our customers," a typical comment went, "want to talk directly to their favorite agent right here at home." Unfortunately, there was little call-answering discipline and there were no established standards. Vital information was constantly being lost. In short, it was chaotic. One day Tucker Taylor walked into Charles Brandon's office and asked "Why can't we have our own Wizard of Avis?" The "Wizard of Avis" was a computerized reservation system for car rentals that featured a centralized telephone system for accepting and routing all reservations throughout Avis's system. The possibility of a wizard seemed to Brandon like a question that OR could answer, and he moved quickly to propose a project to Smith. At first he ran into a stone wall. There was a sharp division of opinion within the company on this matter, and The model calculated the pay for pilots, only after much heated discussion did first …show more content…
Indeed, several key executives were convinced that a series, multihub system— most favored four—was the way to go. It was standard practice to discuss even very preliminary OR results in senior management committee meetings—Fred Smith was an especially eager participant. This dialogue served to change assumptions in the model and to suggest other approaches. The first model runs indicated that a single hub was still the preferred solution. Every time this solution was presented, however, a heated debate ensued. Smith and others continually came up with new ideas about the cost of aircraft, the nature of the facilities used, and the like. With these new considerations in hand, the OR team would head back to its quarters to modify the model and to run it a few more times. This continual dialogue, pitting executive assumptions against their implications as derived by a model, lasted for about a year. Throughout this time, the single hub solution generally dominated in the model results but not, it turned out, in many executives' minds. In the end. Smith decided on the singlehub system—now dubbed the SuperHub. The model revealed the underlying economics clearly. With high cost aircraft and facilities used intensively for compressed periods of time under conditions that demanded near perfect performance—that is, failure to service a plane or to pick up a batch of packages could not be tolerated— the single hub worked best. Given the technology and volumes at the time, the SuperHub design was more flexible; it required only one big sort, reducing total sorting time, and it made crew domiciling easier. The four-hub approach had three major flaws: it caused low utilization of high cost assets and, hence, had a poor ROI (in some cases negative), it had a low

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