Case Interview - help with study.

Hi,

I am going through the first case interview in the "vault case interview practice guide 2."

A copy of it is here: http://sites.duke.edu/dukeapdconsulting/files/2010/08/Vault_Guide2008.p…

Also attached.

The case study is entitled "Amusement Park Case," and is pg. 19 through 24.

I am having issues with the last page, pg. 24.

Two issues:

1. I don't understand how the Revenue values are calculated (e.g., 12.775M, 10.9M, 10M), because the values reflected are different on the previous page. I also tried to include the revenue from non-ticket revenue, but I still didn't get the correct values.

2. I do not understand why the recommendation is C. From the final calculation, it seems that C is the least profitable.

Any help would be appreciated. Let me know if I need to provide more clarification.

Thanks,

K.

AttachmentSize
Pages from Vault_Guide2008.pdf 149.82 KB149.82 KB

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Comments (5)

Apr 17, 2014 - 3:52pm

That entire case is a mess. The numbers in some of the calculations don't match with the numbers in the case (for example, the case says that A's high peak operating costs are $32,000 per day, but the calculations table shows $34,000 per day), some of the calculations themselves seem to be wrong (even using the $34,000 number, the cost doesn't match what their calculation says and if you back into it, it appears that the daily cost should be $35,764.71, which is a pretty random number given that all the other numbers in the case are relatively round), and some of the numbers in the case itself make no sense (the population numbers for site A sum to 109%).

With respect to your specific issues:

1. I don't know where they got those numbers. They seem to have forgotten to include a line in the table for non-ticket spend, but their revenue numbers are higher than their ticket sales numbers, so presumably they meant to include non-ticket spend in revenue. As near as I can tell though, none of the revenue numbers match ticket sales + non-ticket spend.

2. C doesn't make any sense to me. According to their own numbers, C has the lowest annual profit and the second-highest construction costs. A has the highest annual profit and the lowest construction costs, so no matter what assumptions you make about time value of money, etc., it should be the clear winner.

Basically, I think the case is junk. I wouldn't worry about the fact that you got different numbers than it did, because it looks like the case itself is just plain wrong.

Apr 17, 2014 - 4:53pm

Yeah, I just did it and have no idea how they got those revenue numbers. [edit] They added in the concession revenues in the final answer. This is what I got for the concession revenues - site A: 3M, Site B: 1.02M, Site C: ~2M. So when you add that to their ticket revenues, it does total up. However, I got different numbers for the ticket revenues but it's possible I screwed up myself.

Site A looks like the best option to me.

Apr 17, 2014 - 5:23pm

By my math the concession numbers should be $2.5m, $1.75m, and $1.9m, respectively. The implied numbers based on the tables are $3.5m, $2.5m, and $1.8m, respectively, which don't match with my numbers or your numbers. Then again, the table's ticket revenue numbers aren't right either for site A, because apparently they decided that 30% of 150,000 is 50,000 instead of 45,000. So who knows.

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