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Should we buy a valve body from a supplier?

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 pump maker in Germany makes 100,000 valve bodies a year. Its variable cost is EUR 40 per part (materials, direct labor, energy). The accounting system also allocates EUR 25 per part of factory overhead, which would not go away if production stopped. A supplier in Poland offers EUR 55 per part. Should it buy?

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.

Compare the supplier price with the costs that would really be saved
- Relevant cost of making = variable cost only (overhead stays)
- Yearly difference = (supplier price minus relevant cost) x volume
- Then: strategy, quality, risk, other uses of the capacity

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: Full cost on paper
What a strong candidate does: Variable 40 plus allocated overhead 25.
Full cost per part (EUR): 40 + 25 = 65
Step 2: Extra cost of buying
What a strong candidate does: The supplier charges 55, but only 40 of cost disappears.
Extra cost of buying per year (EUR): (55 - 40) × 100,000 = 1,500,000

The recommendation to listen for

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

The pump maker should keep making the valve body, because buying would cost EUR 1.5 million more a year. First, the EUR 25 of overhead per part stays whether or not production stops, so the real comparison is EUR 55 against the EUR 40 variable cost. Second, this means the EUR 65 full cost makes buying look cheaper than it is. The risk is ignoring other uses of the capacity. As a next step, check whether the freed capacity could earn more than EUR 1.5 million a year, or whether the overhead could truly be removed.

Score the candidate

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

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

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.