| HBS Case Collection
(Revised from original 1990 version)
Catawba Industrial Co.
A department general manager has to decide whether or not to add a lightweight compressor to the line, what price to charge, and what volume to produce. The analysis requires maximizing contribution in a situation where one factor is constrained. As such, it takes into account opportunity costs and shadow prices as well as fixed and variable costs, demand curve analysis, and sunk costs. Also invites discussion about the proper measurement, offering departmental profits and return on sales as candidates.
Keywords: Cost vs Benefits;
Aguilar, Francis. "Catawba Industrial Co." Harvard Business School Case 191-053, June 1994. (Revised from original September 1990 version.)