Major snow plowing business

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Question

You operate a major snow plowing business based in Logan. You have recently been approached by a vendor that is developing technology which uses GPS technology to operate snowplows. While drivers are still required for safety purposes, the plows would be controlled by GPS technology. The new plowing technology would reduce the time it takes to plow a property (due to more efficient routing) and significantly reduce property damage (since obstacles on each property can be mapped). Property damage is especially troublesome since it often results in lost customers. The GPS plowing system is currently under development and can be ready for deployment in 2 years. You currently serve about 5,000 properties in Logan and the surrounding area. This number is expected to stay steady for the foreseeable future. There are, on average, 15 'plowable' snowfalls each year and you charge customers $100 (on average) per plowing. Your cost to plow (labor, depreciation, fuel) is $15. About 5% of all plowings result in property damage claims from your customers. While many of these claims are minor (mailboxes etc.), some are major (scratched cars, damaged sidewalks etc.). The average cost per claim is $1,000. The new plowing systems will reduce plowing.

Reference no: EM133654563

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