Case studies

This case and its companion, “Myerson Industries” (UVA-QA-0299), constitute the materials for a negotiating exercise. The exercise is a distributive-bargaining situation surrounding the negotiation of the price for the construction of a building (some minor opportunities exist for creating mutual value).

The managing director of a steel plant faces the decision of how much of each raw material to order for the plant for the following month. Due to lower and upper bounds on the amounts of each raw material in a batch and varying amounts of electricity and time consumed for different raw materials, one can't simply use the cheapest raw material. A linear program and the solver optimization function of Excel will provide the optimal amounts that meet the constraints. Interestingly, the best mixture for a batch is not the best mixture for a monthly plan. Shadow prices indicate the value of relaxing constraints. The typical monthly model from a student will be nonlinear, although it can be written as a linear model. This case provides the basis for an introductory class on linear programming and linear versus nonlinear models.

In December 2001, after a six-month process of vying for AT&T's Broadband, the president of cable operator Comcast Corporation, had just received word that Comcast's $72-billion offer had won the auction. Comcast, the cable industry's third-largest operator, would merge with industry leader AT&T Broadband to form a company with more than $20 billion in revenue and an unparalleled distribution (a presence in 22 of the nation's top 25 markets). Now the presidents of both companies began to consider their post-merger integration strategies. What was important and how should they prioritize their activities? How could they get all stakeholders to understand the rationale for the deal and its business goals and excited about the new AT&T Comcast?

In the early months of the 2007-08 financial crises, a loan manager faces a real estate financing decision. Should he approve a bullet structure three-year loan to a longstanding client, a legendary Texan developer? The developer, who near retirement downsized his business, is seeking financing for his only project: residential or commercial development on an attractive piece of land in suburban Houston. The loan manager considers the decision in light of the mortgage market turmoil, seeing commercial projects as safer, but also factoring that the residential market could bring higher returns if the market stabilizes soon. The manager collects the data and asks an analyst to assess the risks; that ultimately requires assessing the economics of both projects from both the bank's and the developer's perspectives. The bank could still change the interest rate on the loan to receive adequate compensation for the risk it carries, but the loan manager knows that doing so will change their long-term client willingness to take on the loan.

The owner/editor of the small Davis Press encounters a dilemma when she is given the opportunity to publish a novel set in the Islamic holy city of Mecca. Given the events of the last 16 years—the angry fallout after Salman Rushdie's novel The Satanic Verses, the continuing Iraq War, and the recent controversy of Koran desecration at the U.S. Naval Station Guantanamo Bay—publishing the novel presents a host of various ethical dilemmas, including whether she should put her staff at risk. This case discusses the ethics of a free press and challenges the profit motive in the face of jeopardizing political and religious world affairs.

The CEO of Embraer, reflects on his company's dramatic ascent to its position as the world's leading regional aircraft manufacturer. Since becoming a private company, Embraer had successfully introduced seven commercial aircraft models to the market, including its latest, the 118-seat EMBRAER 195. Now, he is concerned because Embraer does not know what to expect from Bombardier, Boeing, and Airbus regarding their competitive response to his company's recent attacks on the commercial aircraft market. How would they respond to Embraer's successful launch of its recent family of jets? Would Bombardier really follow through with its launch of the CSeries? Would Airbus and Boeing perceive the latest attacks by Embraer and Bombardier as attacks on its own family of jets? Most importantly, given Embraer's expectations of rivals' future competitive moves, what should it do next to protect its position and influence its competitors' actions?

Richard Alpert, senior partner at Evergreen Investments, must decide which of his two best employees to promote to the position of managing VP. He had initially preferred Charlie Pace over Daniel Faraday, but that decision had become less clear-cut when Alpert inadvertently overheard an office conversation and learned that Pace was taking Adderall, a stimulant primarily prescribed for people suffering from attention deficit/hyperactivity disorder (ADHD). Pace did not have ADHD and apparently obtained the medication by deceiving a physician. Alpert is faced with a number of questions, including whether it was fair to Faraday—or any other high-performing employee—to be passed over for promotion in favor of someone who illicitly boosted his performance with a substance he did not medically need.

At the core of this case is a distribution, or sourcing, problem that can be modeled and solved using linear programming (LP). There are also issues of whether to build (a) new plant(s)––and if so, what the capacity should be––and whether to expand or close one or more of the existing plants. These latter issues can be analyzed using a 0/1 LP facility-location model. Alternatively, because the number of options is limited, they can be analyzed using the straight LP model of the distribution problem as a tool to facilitate analysis.

Gender in the workplace. Is it still an issue? While it is increasingly easier in the early 21st century for women to work, manage, and take positions of high responsibility in American business, some issues and difficulties still remain. This series of vignettes touches on some difficult situations—for both women and men—involving sexual and romantic relationships in the workplace, decisions on whether to start a family, dress codes, family obligations, and sexual harassment.

George Lasiter sells special-events T-shirts and must decide how many to order for an upcoming concert. He has high, medium, and low estimates of both concert attendance and the percentage of attendees who will want a shirt. In addition, he has assessed the relative likelihoods of each estimate. The case can be used to introduce or reinforce the fundamental issues surrounding decision making under uncertainty.