Cumberland Case

1 CUMBERLAND QUESTIONS

1.1 What’s your price for the curled metal parts ? Why ?

Regular price of asbestos pad is $3. A CMI’s pad lasts longer than asbestos pads 10 times

Initially we could say that at the least the price should be $30, but we have to take into account the tests performed.

The Corelick test used 20 sets x 20 pads x 50 dollars per set ($1000) of asbestos pads, which means 6 CMI pads, it is a big difference. So, a simple calculation says that if we divide 1000 dollars by 6 pads, we could have perfectly charged to Corelick $167 for 6 pads

The Fazio test confirms former data, as they used $40 for each set of 12 asbestos pads used. And again CMI pads are cleary more efficient. Taking into consideration that the same job was performed with only 1 CMI set composed of 5 pads.

These calculations shows that at the least the price could be 167 / 6 = 27,83 $ per pad. In addition, the operations are performed faster, safer and no implies asbestos pollution, so this price could be highly increased up to the point that covers the production costs.

1.2 How much is one of these pads worth to the customer? Do test data help to answer this question?

Yes, if we take into consideration the Corelick test, we can deduce the following

Using the albestos pads, Corelick spend 20mins (150ft/hrs: p.3) on driving and 400mins to change the set pads. The CMI’s pads spend only 15mins (200ft/hrs: p.3) on driving and 4mins for changing.

This implies that (420–19)min /60min = 6 hrs 41 min time saving.

Corelick have to spend $100 per hour, and so Colerick probably save about $668/6 pads =$111.33 on renting of the equipment, labor and overhead costs for this work by means of CMI’s pads.

The approximate worth using CMI’s pad is $166.67+$111.33 = $278.00

1.3 How big is this market?

A 1977 report by Construction Engineering magazine estimated that approximately 13,000 pile hammers were owned by companies directly involved in pile driving. Industry...