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Calculation of number of wine bottles in Year 5

Oliver Wyman case: Setting up a Wine Cellar
Neue Antwort am 9. Apr. 2023
4 Antworten
519 Views
Anonym A fragte am 6. Feb. 2023

Hi Team, 

In Year 5, why aren't we considering the sale of 120 bottles (investment cellar in Year 0)? Instead, we are including these 120 bottles along with the 72 bottles from Year 1, in Year 6 sale calculation, why is this so? I would like to understand the logic behind the same. 

Thanks in advance! 

 

 

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Pedro
Experte
antwortete am 9. Apr. 2023
Bain | Roland Berger | EY-Parthenon | Mentoring Approach | 30% off first 10 sessions in May| Market Sizing | DARDEN MBA

This is how the cash flow should look like:

This is the cash flow per year. Each bullet number is the year and between parenthesis the accumulated cash flow

  1. -13,5k -13,2k (-26,7k)
  2. -13,2k (-39,9k)
  3. -13,2k (-53,1k)
  4. -13,2k (-66,3k)
  5. -13,2k (-79,5k)
  6. -13,2k +30k +18k (-44,7k)
  7. -13,2k +18k (-39,9k)
  8. -13,2k +18k (-35,1k)
  9. -13,2k +18k (-30,3k)
  10. -13,2k +18k (-25,5k)
  11. -13,2k +18k (-20,7k)
  12. -13,2k +18k (-15,9k)
  13. -13,2k +18k (-11,1k)
  14. -13,2k +18k (-6,3k)
  15. -13,2k +18k (-1,5k)
  16. -13,2k +18k (3,3k) → Break Even.
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Hagen
Experte
Content Creator
bearbeitete eine Antwort am 7. Feb. 2023
#1 Bain coach | >95% success rate | interviewer for 8+ years | mentor and coach for 7+ years

Hi there,

I would be happy to share my thoughts on it:

  • It seems like in the case study, the initial investment is considered to be made in year 0, and as a result, the sale of 120 bottles takes place after 5 years, i.e., in year 5.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

(editiert)

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Ian
Experte
Content Creator
antwortete am 7. Feb. 2023
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

As the case states, you are selling the 120 initial investment in year 5!

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Benjamin
Experte
Content Creator
antwortete am 6. Feb. 2023
Ex-BCG Principal | 8+ years consulting experience in SEA | BCG top interviewer & top performer

Hello,

I think the case treats the initial investment as “Year 0”, and the time accounting only starts after you start drinking and buying new wine.

This is why the case says “Thus at the end of year one, I should have 120+72=192 bottles in the investment section or 242 bottles in the total cellar”

Hope this clarifies!

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Anonym A am 6. Feb. 2023

In the "number of wine bottles" section - "After 5 years (in my time accounting), I sell the kick-start of 192 bottles". This says that you sell 192 bottles in Year 6 In the "economics of the cellar" section - After 5 years, you sell the kick-start of 120 investment bottles and get a big push in revenue of 120*$250=$30,000. Here, the solutions says that you sell 120 bottles in Year 6. I'm confused on this aspect.

Pedro

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