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Should-cost of a moulded plastic part

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.

The fictional Pune appliance maker buys 400,000 moulded plastic drum covers a year. The supplier quotes INR 300 per part. Each part uses 1.25 kg of plastic resin at INR 120 per kg. It takes 60 seconds on a moulding machine that costs INR 2,400 an hour to run, including its depreciation and power. Labour to trim and pack is INR 10 per part. Allow 15 percent of direct cost for overhead and scrap, and a 10 percent profit margin for the supplier on top. What should the part cost, and how big is the gap?

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.

Should-cost = (material + machine + labour) x (1 + overhead and scrap) x (1 + supplier margin)
- Material: kg per part x price per kg
- Machine: cost per hour x hours per part
- Labour per part
- Overhead, scrap and marginpercentages on top
- Key: Gap to the quote, per part and per year

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: Material
What a strong candidate does: 1.25 kg at INR 120 per kg.
Material per part (INR): 1.25 × 120 = 150
Step 2: Machine time
What a strong candidate does: INR 2,400 an hour is INR 2,400 for 3,600 seconds; the part takes 60 seconds.
Machine cost per part (INR): 2,400 ÷ 3,600 × 60 = 40
Step 3: Direct cost
What a strong candidate does: Material, machine and labour.
Direct cost per part (INR): 150 + 40 + 10 = 200
Step 4: Overhead and scrap
What a strong candidate does: 15 percent of direct cost.
Overhead and scrap per part (INR): 200 × 0.15 = 30
Step 5: Should-cost with margin
What a strong candidate does: Add a 10 percent margin to INR 230.
Should-cost per part (INR): (200 + 30) × 1.1 = 253
Step 6: Gap per part
What a strong candidate does: Quote minus should-cost.
Gap per part (INR): 300 - 253 = 47
Step 7: Gap per year
What a strong candidate does: 400,000 parts, shown in crore (1 crore is 10 million).
Gap per year (INR crore): 47 × 400,000 ÷ 10,000,000 = 1.88

The recommendation to listen for

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

The buyer should open a fact-based negotiation, because the quote of INR 300 is about INR 47 a part above a should-cost of about INR 253, worth about INR 1.88 crore a year. First, ask for the supplier's cycle time and resin price, since material and machine time are 190 of the 200 rupees of direct cost. Second, offer something in return, such as a longer contract or a volume commitment, so the supplier can lower its overhead per part. The risk is that the model misses a real cost, such as a tool the supplier paid for; aim for a price nearer INR 265 than 253. As a next step, ask two other moulders for quotes to test the model.

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.