Vehicle Repositioning: reducing the dry run and identifying the demand profile of "Chartered Cabs"

Abstract

In the booming car rental industry in the major cities of India, the major challenges being faced are fluctuating demand, locating optimum yet feasible location for depot construction in terms of distance from pick up points and cost of construction and repositioning of the vehicles throughout the day across depots. The major objective is to find out the optimum strategy to obtain the optimum number of depots so that the distance travelled by a car without any passenger {dry run} can be minimized, thereby saving on the extra petrol cost, which forms a significant part of the cost structure. Also the vehicles need to be repositioned from one depot to another in order to decrease the dry run and the response time. Improving customer satisfaction by fulfilling every possible need of the customer is the key to success in this industry which is constantly being threatened by increasing competition from new players like Apple Cabs, I-cabs etc. After analysis of the real time data for duration of 3 months, the demand profile was studied. it showed that in terms of pick-up points, the demand was highly varying across places, with Hansol {Airport} exhibiting the highest demand. With regard to the demand profile across days in a typical week, Monday and Friday showed the highest demand. This shows that a majority of the retail customers are corporate working in different offices, and hence such typical trend during the start and end of a weekend. The optimum number of depots was found out based on the majority demand. The repositioning strategy was also formulated based on the location and demand of the pick—up and drop points. It was also observed that increasing the efficiency of the servers can serve the present demand with almost half the current fleet size, thereby saving on the fixed component of the cost being incurred presently. Finally using the proposed strategy it was found that the dry run reduced significantly and that when converted into revenue terms will increase the bottom line of the company.