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Easy Make vs. Buy Profitability Consumer Decision

Purchasing Your Coffee Maker

#Real Life, Retail #Retail
ProHub Comment

This is an introductory case designed to teach candidates how to structure a personal consumer decision using consulting frameworks. The case combines qualitative analysis (Make vs. Buy framework with Costs, Benefits, and Risks) with a straightforward quantitative breakeven calculation, making it ideal for teaching how to synthesize different analytical approaches in a practical, relatable scenario.

Estimated Time 16 minutes
Difficulty Easy
Source Pennsylvania
10 / 100
Your friend, Matt, is considering buying a coffee maker. He has a $200 maximum budget but as a new Penn grad, he would be happy to spend less than that. He has retained your consulting skills to help him make this decision.

Clarifying Information

  1. Matt will be an investment banking analyst and has heard rumors of long hours and late nights. He feels that he will need the caffeine to get through the dreaded first year.
  2. Matt’s maximum budget is $200. Thus, many of the fancy, barista style coffee makers are out of his budget.
  3. Matt hopes to be able to make standard, drip cups of coffee with his coffee maker. He will occasionally order a Latte.
  4. After graduation, Matt’s mom gave him a coupon to Bed Bath & Beyond. Using her 20% off coupon, Matt could purchase a Keurig for $100.
  5. Cost of Keurig: $100
  6. Cost of Daily K-Cup, Milk & Splenda: $1
  7. Cost of Daily Starbucks Coffee: $3
  8. Matt drinks 5 coffees per week
Mock Interview
Interviewer

Your friend, Matt, is considering buying a coffee maker. He has a $200 maximum budget but as a new Penn grad, he would be happy to spend less than that. He has retained your consulting skills to help him make this decision.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
Score coming soon
Practice this case with AI Mock Interview

Matt, a new investment banking analyst, needs help deciding whether to purchase a Keurig coffee maker for $100 (with his mother’s coupon) or continue buying daily Starbucks coffee at $3 per cup. The analysis shows that at his consumption rate of 5 coffees per week, the breakeven point is 50 cups or 10 weeks, making the purchase financially justified given the product’s 2+ year useful life.

Key Insights:

  1. Breakeven calculation: ($3 - $1) × Quantity = $100, solving for Quantity = 50 cups or 10 weeks
  2. Make vs. Buy framework should consider fixed costs, variable costs, and qualitative factors (convenience, quality, risks)
  3. Risk mitigation is critical: candidate should investigate access to free alternatives at workplace, K-Cup variety, and supply chain logistics
  4. Product warranty and useful life are essential to validate that breakeven timeline is realistic