Comments on: Zipcar Late Return Penalty and Variability, Utilization, Queueing

By: Pete Abilla

Pete Abilla — Sat, 26 Nov 2011 15:57:20 +0000

In reply to Lee.

Hi Lee,

I never professed to be an expert on the Zipcar service. I admire the company and what they’re doing.

My suggestion is based simply on Queueing principles, not what makes sense for the business, which I indicate in the post.

Your comment is interesting. I wonder how much time over the course of a rental day, all those exceptions you mention “add up to” in terms of rental hours. Do you know? And if you do, how does that compare to the automatic 6 hours per day?

By: Lee

Lee — Sat, 26 Nov 2011 15:11:36 +0000

“I have never used the Zipcar service” – Next time, find out what the company’s solution actually IS, before you ASS/u/ME something else and offer substandard solutions which lack business sense. This is Zipcar’s solution:

There is no charge for cars returned 4 minutes or less. Customers who know they will be slightly more than that, caught in traffic, etc., phone zipcar for remedies which may include re-routing another customer who is waiting for the car, blocking the auto-late-fee charge, or allowing the customer to extend their rental time by 30 minutes increments. This flexible method also reduces complaints of the high late fee since customers are given the opportunity to fix their situations before they get out of control.

Adding an automatic buffer of 15 minute around rentals is a substandard idea since it would typically cost Zipcar 6 hours of rental time over hourly slots each day.

By: Jerome Coignard

Jerome Coignard — Fri, 09 Sep 2011 21:13:09 +0000

It’s a very interesting article, Pete. On a similar topic, I would be interested in reading your point of view on how Netflix’s queuing concept can reduce the variability in customer loyalty for their subscription model.

By: John Hunter

John Hunter — Wed, 31 Aug 2011 09:44:32 +0000

Good stuff. Without knowing the situation (myself) couldn’t a high late fee be the solution? The high late fee makes those renting cars very likely to return them on time to avoid the fee. It isn’t clear if you have data that the high late fee is just a penalty that doesn’t make the system perform better or not (to me reading this anyway). I agree, I think zipcar is an interesting innovation. It would seem to me real time (internet enabled communication) would help a great deal – notify of bottleneck, report cars needing service, tell user that car is late but these 5 nearby location have a car… Some of this is just trying to make the problem have a lessor negative impact.

By: Mark H. Davis

Mark H. Davis — Tue, 30 Aug 2011 20:21:20 +0000

Interesting article, Pete. I agree with the principle of natural variation — and that the tendency is to schedule out at 100% of capacity to supposedly maximize productivity — but I don’t see how the root cause of variation was actually addressed here, as you state at the conclusion. Seems that the variation was only incorporated into the scheduling. Cars are being returned “late,” so we’ll just push the schedule out so that they’re not “late” anymore. Would there also be an opportunity to understand the Pareto of late returns and address accordingly? Thanks again for an interesting topic.

By: Pete Abilla

Pete Abilla — Tue, 30 Aug 2011 17:43:30 +0000

Hi Tommy,

Yes, I love the book Factory Physics. My background is in Operations Research and that book is essentially the bible, as it were.

Thanks for taking the time to read shmula.

By: Tommy

Tommy — Tue, 30 Aug 2011 16:53:02 +0000

I notice that you take big inspiration from the book factory physics in many of your posts. If you havent read it and it is just a coinsidence you should read it.