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An appliance maker in Ohio: more inspectors, or fewer defects?

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

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A maker of kitchen appliances in Ohio, United States, builds 200,000 units a year. 4 percent are defective. Its 6 inspectors (USD 50,000 a year each) catch 75 percent of defects, which cost USD 30 each to rework. The rest reach customers and cost USD 250 each in warranty repairs, shipping and replacements. The cost breakdown is in the table with this case. Option A: hire 3 more inspectors to catch 90 percent. Option B: spend USD 400,000 once on better moulds and fixtures that cannot be assembled wrongly, plus USD 100,000 a year on training, which cuts defects to 1 percent. Which is better? (Fictional company, illustrative figures.)

The prompt refers to Exhibit 1. After reading it, say: "Open Exhibit 1 now."

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. 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.

Cost of quality = prevention + appraisal + internal failure + external failure
- Today: how many defects, how many caught, what each costs
- Option A: same defects, more caught
- Key: Option B: fewer defects made
- Compare yearly cost, then payback on the one-off spend

Exhibit 1

The prompt uses this exhibit, so the candidate opens it right after you read the prompt ("Show exhibit 1" on their screen).

The appliance maker's cost of quality today(USD thousands a year)

The appliance maker's cost of quality today
Kind of cost	What it is here	Cost a year
Prevention	Nothing spent today	0
Appraisal	6 inspectors	300
Internal failure	6,000 units reworked at USD 30	180
External failure	2,000 units at USD 250	500
Total cost of quality		980

So-what

Half the cost of quality comes from defects that reach customers, and nothing is spent on prevention.

4. 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: Defects today
What a strong candidate does: 4 percent of 200,000 units.
Defective units a year: 200,000 × 0.04 = 8,000
Step 2: Cost today
What a strong candidate does: Inspectors 300, rework of 6,000 caught units, and 2,000 units reaching customers, in USD thousands.
Cost of quality today (USD thousands): 6 × 50 + 8,000 × 0.75 × 30 ÷ 1,000 + 8,000 × 0.25 × 250 ÷ 1,000 = 980
Step 3: Option A
What a strong candidate does: 9 inspectors; 7,200 caught and reworked; 800 reach customers.
Cost with more inspection (USD thousands): 9 × 50 + 8,000 × 0.9 × 30 ÷ 1,000 + 8,000 × 0.1 × 250 ÷ 1,000 = 866
Step 4: Option B
What a strong candidate does: 2,000 defects; the same 6 inspectors catch 1,500; 500 reach customers; plus USD 100 thousand a year of prevention.
Cost with prevention (USD thousands): 100 + 6 × 50 + 2,000 × 0.75 × 30 ÷ 1,000 + 2,000 × 0.25 × 250 ÷ 1,000 = 570
Step 5: Saving from A
What a strong candidate does: Today minus option A.
Yearly saving, option A (USD thousands): 980 - 866 = 114
Step 6: Saving from B
What a strong candidate does: Today minus option B.
Yearly saving, option B (USD thousands): 980 - 570 = 410
Step 7: Payback on B
What a strong candidate does: The one-off USD 400 thousand divided by the yearly saving.
Payback, option B (years): 400 ÷ 410 = 0.9756

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Choose prevention. It saves about USD 410,000 a year against USD 114,000 for more inspection, and its USD 400,000 one-off cost pays back in about one year. It also cuts the defects customers see from 2,000 a year to 500, which protects the brand in a way these numbers do not even count. The risk is that the 1 percent defect rate is an estimate: run the new moulds on one line first and measure before changing them all.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.