I wrote the NPL case right before class, where we debriefed it. I’m sloooowly getting the hang of this debriefing thing… here were some of my thoughts during the session:
- For the production mix quant, although I did get the right production mix volumes (pretty simple calculation after all, just calculate CM/unit for each product then divide that by MH/unit), according to the sample quants I should have gone an extra step of comparing the current mix to the optimized mix. This makes sense, since we were asked by Alexa to find the mix that optimizes profitability. It’s not enough to just say “here’s the one that optimizes profitability,” we need to actually quantify the increase in profitability using the optimal mix.
- I’m so happy my NPV analysis was mostly right! I was pretty uncertain about the NPV as I was doing it (kept wondering if depreciation on the machine was supposed to be included… in the end, I didn’t, which was the right choice because the NPV is about cash flows after all, and depreciation isn’t a cash activity) so I was overjoyed to see that my calculations were pretty much all correct. Unfortunately, the one big thing I did get wrong—including R&D as part of the initial investing outflow when it should have been a sunk cost (ie. not included in the analysis)—totally screwed up my analysis, because it led to a negative NPV. If it weren’t for that, the NPV would’ve been positive. The other thing I forgot was to include a tax shield benefit related to the marketing blitz and lease deposit. But if I hadn’t treated the R&D expense incorrectly, I still would’ve gotten a positive NPV even if I hadn’t included the leasing/marketing tax shield.
- So, yah, this case I actually did pretty well on the quants, but the qualitative was a different story. Granted, I half-assed the qual as usual, but I still missed some major components. First, instead of simply saying “I recommend this option” I should have provided several solid reasons (listed in point form) for why to choose that option. This feels a bit redundant from the analysis, but I guess that’s the whole point of the recommendation, to restate the most important points. Also, it’s really important to discuss next steps and risk mitigation strategies, which I did not do. Finally, I forgot about the “address any other issues” deliverable that Alexa asked for (I knew I was forgetting something when I was planning my outline!!). This would be the time to use the IIR approach. During the exam, I’ll just have to make sure to throw the word “IIR” into my plan somewhere at the bottom so I don’t forget to bring up some other issues.