Interviewer view · keep this screen to yourself
Which link breaks first, and the cheapest fix
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
A bottled-water company in Indonesia, which reports in US dollars, expects demand of 1,000,000 cases next year. Its plant can make 1,200,000 cases, but its own trucks can move only 900,000. Each case earns USD 2 of contribution. It can hire a third-party logistics firm at USD 0.60 per case, or run more trucks of its own for USD 150,000 a year, adding 150,000 cases of transport capacity. The table below shows each link in the chain. Can it meet demand, and what is the best fix?
The prompt refers to Exhibit 1. After reading it, say: "Open Exhibit 1 now."
Format note: Interviewer-led: the interviewer shows the chain table and asks which link breaks, what it costs, and which of two fixes to choose.
2. Answers to clarifying questions
Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.
If asked: Is demand even across the year?
Answer: It peaks in the dry season, but assume even demand for now.
If asked: Could we sell unmet demand later?
Answer: No, customers switch to other brands.
3. The hypothesis a strong candidate states
Listen for an early, testable guess like this one. It does not need to match word for word.
The plant has spare capacity, so my hypothesis is that transport, not production, is the limit, and that renting transport is cheaper than owning more.
4. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- Compare each link with demand, then compare fixes
- Production versus demand
- Key: Transport versus demand
- Fix: third-party logistics or own trucks
Exhibit 1
The prompt uses this exhibit, so the candidate opens it right after you read the prompt ("Show exhibit 1" on their screen).
| Link in the chain | Capacity next year (cases) | Demand next year (cases) |
|---|---|---|
| Bottle and cap supply | 1,500,000 | 1,000,000 |
| Production (plant) | 1,200,000 | 1,000,000 |
| Transport (own trucks) | 900,000 | 1,000,000 |
So-what
Only transport is below demand, so it is the link that limits the chain; supply and production have spare capacity.
5. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Production
What a strong candidate does: Capacity of 1,200,000 against demand of 1,000,000, so production has spare capacity.
Production slack (cases): 1,200,000 - 1,000,000 = 200,000
Step 2: Transport
What a strong candidate does: Transport can move 900,000 against demand of 1,000,000.
Transport shortfall (cases): 1,000,000 - 900,000 = 100,000
Step 3: Required utilization of transport
What a strong candidate does: Meeting demand would need the trucks to run above 100 percent of capacity, which is impossible.
Required transport utilization (%): 1,000,000 ÷ 900,000 × 100 = 111
Step 4: Cost of doing nothing
What a strong candidate does: 100,000 cases of lost sales at USD 2 of contribution each.
Lost contribution (USD): 100,000 × 2 = 200,000
Step 5: Fix A: third-party logistics
What a strong candidate does: Move the 100,000 extra cases at USD 0.60 each.
Net gain with third party (USD): 100,000 × (2 - 0.6) = 140,000
Step 6: Fix B: own trucks
What a strong candidate does: The extra trucks cost USD 150,000 a year but only 100,000 of their 150,000 cases of capacity are needed.
Net gain with own trucks (USD): 100,000 × 2 - 150,000 = 50,000
Step 7: When would owning trucks win?
What a strong candidate does: Third-party transport would cost as much as the trucks only at this many cases, more than the 150,000 the trucks can carry.
Cost-equal volume (cases): 150,000 ÷ 0.6 = 250,000
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
Hire a third-party logistics firm for the extra volume, and do not add production. First, we can make enough but cannot move enough: transport falls 100,000 cases short, which would lose USD 200,000 of contribution. Second, the third party costs about USD 60,000 and keeps USD 140,000 of profit, against a net USD 50,000 from running more of our own trucks; at USD 0.60 per case, renting stays cheaper for any shortfall the extra trucks could carry. Third, production and bottle supply already have spare capacity, so more plant capacity would change nothing. Before the dry season, check whether peak demand also stresses the plant.
Risks a strong answer names: Third-party capacity may be scarce in the peak season; Service quality from a third party may be harder to control.
Next steps: Get quotes from two logistics firms with peak-season guarantees; Model the dry-season peak month by month.
Strong versus weak
A strong answer
Checked every link, found transport was the limit, valued the shortfall, and compared two fixes on cost.
A weak answer
Recommended a bigger factory, which already had spare capacity.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
Total
0 out of 25
Score all five criteria to see the band and the feedback template.