Economics 6300 Hertz Simulation Report

Simulation Report

As much as I enjoyed the simulation, I believe that it is safe to assume that I am not

interested in a career in the market strategy for Hertz. I went into the simulation with

expectations as to how I would perform, and there were times where I surprised myself. The

simulation was based on an idea that we would experience several different market demands,

strategies from competition, and financial challenges. I felt like I could often drown in all the

data and my results showed that very thing. If you have too narrow of a focus when creating a

strategy, you will focus on factors that will not necessarily lead you to a successful result. I

believe this was the biggest lesson that I learned during the simulation and class.

Throughout the simulation, the cornerstone of my strategy was based on capacity

utilization and price manipulation. I wanted to have my largest fleet running at 80% capacity

utilization or greater at a premium price. I would compare months with historical data to make

sure that I had enough cars in any given region, all the while making sure that I could account

for the market demand. This was important because I felt that if I could run at above 80%

capacity utilization, I was able to turn a profit as long as I was aware of the operating costs. On

every run, I would often find myself manipulating the cost per vehicle rented to try and

establish a point where I could significantly manipulate the capacity manipulation number

above the 80% threshold goal that I had set for all of the markets. I would often find the ceiling

of what consumers are willing to pay in any given month and run an analysis to predict what I

should set the price at in the next month. I would go further into my price analysis as the

months progressed. For instance, moving cars from Tampa where the customer was unwilling

to pay a premium to Orlando where I could have a much larger capacity utilization percentage

would equate to a larger number of net sales. The below data shows that every time there was

an increase in unfilled orders, I would respond by price manipulation