Benjamin Carpet
Practice this intermediate go/no go case interview question in the Manufacturing sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
ProHub Comment
This is a multi-layered investment decision case that progresses from a simple payback analysis (Question 4) to a more complex revenue expansion scenario (Question 5). The case teaches candidates to recognize when cost savings alone are insufficient to justify a large capital investment, and to identify secondary revenue opportunities that transform the investment thesis.
Estimated Time
26 minutes
Difficulty
Medium
Source
Cornell
10
/ 100
Your client is the family owner of a company that serves residential and commercial markets and operates 5 days/week for 16 hours/day. The owner is looking to purchase a new machine to improve its current production process.
Clarifying Information
- Current Production Process: Purchase colored yarn → Load correct colored yarn onto spots → Weave carpet with colored yarn → Back carpet → Cut, roll, store
- Considering New Process: Purchase uncolored yarn → Load spools → Weave carpet → NEW MACHINE (Inks, Dyes, Dries) → Back carpet → Cut, roll, store
- Machine costs $25M
- The new process improves costs across all areas except operations
- $0.50 per yard savings for yarn
- $0.50 per yard savings for inventory
- $0.25 per yard savings for labor
- $1.00 per yard increase for operations
- Annual yarn production is 10M yards
- Machine has useful life of 10 years
- New technology allows for creation of carpet with new textures and patterns which will attract high end customers
- Current customers pay $16 per yard
- New customers will pay 25% more
- High-end market sells 70M yards / year
- Benjamin Carpet will capture 5% of the high-end market
- 30% of current market comes from high-end customers