Question: Besides optimizing the shop mix, BCG has also been asked to provide a view on where Highroad should expand its footprint, out of a list

Besides optimizing the shop mix, BCG has also been asked to provide a view on where Highroad should expand its footprint, out of a list of potential sites provided by the highway authority. In order to do this, a simple profit model was developed to forecast the profit impact of each potential addition to the network.For example, Highroad currently operates the only rest stop between the cities of Nashua and Lowell, code named C1. Highroad is paying the government highway authority $5,000 per day for the concession (right to operate) for C1.Due to increasing traffic on the highway between the two cities, the highway authority is proposing to develop another rest stop (code named C2, situated as below) and offering Highroad the rights to operate it. The cost for the concession to operate C2 is also $5,000 per day.Your team has come up with a simple model to estimate revenues and profits for both rest stops. Based on the exhibit below, please answer the following four questions. Traffic from Nashua to Lowell =100 cars per hourTraffic from Lowell to Nashua =100 cars per hourBoth directions of traffic can turn off to C1, and to C2 if it exists.From Nashua to C2 is 30 miles, from C2 to C1 is 30 miles, from C1 to Lowell is 40 miles.The probability that a car will visit a rest stop increases by 1% for every mile driven without encountering a rest stop or a city. For example, a car driving from Lowell to Nashua would have a 40% chance of visiting C1. If that car visits C1, it would have a 30% chance of also visiting C2(if that exists).EconomicsEach car that visits a rest stop is expected to result in an average revenue of $10 to Highroad. Assume that for each rest stop, Highroad has only two items in its cost structure: Concession fees ($5,000/day) Other operating expenses ($6,000/day) Question 1: What is the current estimated profit per dat for C1 before C2 is build? Question 2: What is the profit per day for the new rest stop C2 if it becomes operational? Question 3: If C2 becomes operational, what will be the estimated profit per day for C1?

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