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Stay in China, move to Vietnam or move to Mexico?

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 fictional company sells 1,000,000 kitchen appliances a year in the United States, all made in China. Factory cost per unit: China USD 20.00, Vietnam USD 21.50, Mexico USD 24.00. Freight per unit: USD 1.20, USD 1.30 and USD 0.50. For this exercise, assume extra US tariffs of 25 percent of factory cost on goods from China, 12.5 percent from Vietnam and 0 percent from Mexico (USMCA-qualifying). Days of stock in transit and in safety stock: 60, 55 and 15, at USD 0.02 per unit per day. Moving costs USD 3 million for Vietnam and USD 6 million for Mexico. What should the company do?

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.

Decision = yearly saving vs one-off cost, tested against tariff changes
- Landed cost per unit in each location
- Yearly saving and payback
- Key: What if tariffs change?

Exhibit 1

Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).

Landed cost per appliance by location (USD, assumed tariffs)(USD per unit)

Landed cost per appliance by location (USD, assumed tariffs)
Cost item	China	Vietnam	Mexico
Factory cost	20	21.5	24
Freight	1.2	1.3	0.5
Assumed extra tariff	5	2.69	0
Inventory holding	1.2	1.1	0.3
Landed cost	27.4	26.59	24.8

So-what

The dearest factory gives the cheapest landed cost, but only while the tariff gap lasts.

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: China landed cost
What a strong candidate does: Factory, freight, 25 percent tariff, 60 days of stock.
China landed cost (USD): 20 + 1.2 + 20 × 0.25 + 60 × 0.02 = 27.4
Step 2: Vietnam landed cost
What a strong candidate does: Factory, freight, 12.5 percent tariff, 55 days of stock.
Vietnam landed cost (USD): 21.5 + 1.3 + 21.5 × 0.125 + 55 × 0.02 = 26.59
Step 3: Mexico landed cost
What a strong candidate does: Factory, freight, no tariff, 15 days of stock.
Mexico landed cost (USD): 24 + 0.5 + 0 + 15 × 0.02 = 24.8
Step 4: Mexico saving per year
What a strong candidate does: Against China, on 1,000,000 units.
Yearly saving, Mexico (USD): (27.4 - 24.8) × 1,000,000 = 2,600,000
Step 5: Mexico payback
What a strong candidate does: One-off cost divided by yearly saving.
Payback, Mexico (years): 6,000,000 ÷ 2,600,000 = 2.31
Step 6: Vietnam payback
What a strong candidate does: Saving of USD 0.8125 a unit against a USD 3 million move.
Payback, Vietnam (years): 3,000,000 ÷ ((27.4 - 26.5875) × 1,000,000) = 3.69
Step 7: If Mexico lost its exemption
What a strong candidate does: A 10 percent tariff on the USD 24 factory cost.
Mexico landed cost with a 10 percent tariff (USD): 24.8 + 24 × 0.1 = 27.2
Step 8: If China's tariff fell to 10 percent
What a strong candidate does: China's tariff drops from USD 5.00 to USD 2.00 a unit.
China landed cost with a 10 percent tariff (USD): 20 + 1.2 + 20 × 0.1 + 1.2 = 24.4

The recommendation to listen for

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

The company should move part of its production to Mexico, not all of it, and keep China as the second source. First, at today's assumed tariffs Mexico saves about USD 2.60 a unit, USD 2.6 million a year, and pays back its USD 6 million move in about 2.3 years, faster than Vietnam at about 3.7 years. Second, Mexico's 15 days of stock instead of 60 also frees cash and speeds response. The risk is that the answer rests on the tariff gap: if Mexico lost its USMCA exemption it would cost USD 27.20, about the same as China, and if China's tariff fell to 10 percent China would be cheapest at USD 24.40. As a next step, move about half the volume, keep both plants qualified, and review each year after the USMCA review.

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.