Catawba Case

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Harvard Business School

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rP os t

Rev. June 28, 1994

Catawba Industrial Company

op yo Marge McPhee, general manager of the compressor manufacturing department of Catawba
Industrial Company, quickly spotted the reports that she had been waiting for in the pile of mail that had accumulated during her trip to a West Coast industrial equipment trade show. A sales forecast and a cost tabulation for a proposed new, light-weight compressor provided her with the information she needed to ascertain whether or not to introduce it, what volume to produce, and what price to charge. Catawba Industrial Company, located west of Charlotte, North Carolina, was a major supplier of automatic industrial paint systems (used
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Aguilar prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
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191-053

Catawba Industrial Company

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The cost figures for the new product that had been prepared by the production engineering department (see Exhibit 1) were higher than Marge had anticipated. This was of some concern to her since the compressor department was operating at full capacity, and the new unit therefore would have to generate a higher return than the standard product to justify displacement.

Standard Compressors

Light Weight Compressors

op yo The compressor plant, capable of producing four standard compressors per day, operated two shifts

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