Capital One Interview Question: You have the choice between u... | Glassdoor

## Interview Question

Operations Analyst Interview(Student Candidate) Richmond, VA

# You have the choice between using first class or third

class mail for a letter you are sending out to potential customers. First class costs \$0.50 per piece and reach 100% of potential customers. Third class costs \$0.40 per piece and reaches 80% of potential customers. Which do you use?

3

It provokes you to ask questions. You do not nearly have enough information to perform the analysis. You need to know the present value of each customer, how many mailings, and calculate the point of indifference in terms of how many letters you are sending, etc.

Interview Candidate on Jan 13, 2010
6

First class should be used, as the cost of each delivered letter will be the same, but you will reach all of your intended audience.

Example: 1000 pieces to be sent, sending first class costs \$500 and reaches 1000 (\$.50 per peice), and sending second class costs \$400 and reaches 800 (\$.50 per piece)

Postal Clerk on Jan 19, 2010
10

either one is good.

For example, you will reach 0.8 person by spending \$0.4. If divided 0.4 by 0.8, we get that we will reach 1 person by spending \$0.5. So two methods have the same effect.

Peppermint on Dec 20, 2010
1

Need to know the Revenue per customer and no of customers before we can decide on either

Gaurav on Mar 6, 2011
2

@gaurav: don't make it too complicated. they just want to know the costs of reaching the customers.

peppermint is right.

rob on Oct 24, 2011
4

peppermint is not right. say you make 1000 dollars off of each customer you reach at probability .5. Assuming you send 1000 letters, first class reaches all 1000 and has total cost 500 dollars. revenue is (1000 customers reached)(.5 prob make 1000 dollars)(1000 dollars) = 500,000 and profit is 500,000-500 = 499,500. third class costs 400 dollars, reaches 800 people, gives revenue of (800)(.5)(1000)= 400,000, profit is 400,000-400=399,600. You can generalize this to a formula to determine which is better given number of letters to be sent, expected money off of customers who accept, and probability that the customers letters reach will accept.

Anonymous on Sep 28, 2012
0

Peppermint is right.
Assumption: only when the letter has reached the recipient, he becomes a potential customer. Say they send letters to x people
So, Cost per Potential Customer=
0.5/x and 0.4/(0.8x) for respective cases
So, cost per potential customer is same in both cases.

Anonymous on Mar 25, 2015

This post has been removed.

0

Send the letter through 1st class mail if the price of the product capital one is trying to sell is above \$0.90. If not, send the letter through 3rd class mail.

Assumptions:-
•Potentially customers = actual customers

Sample calculation:-
Profit = Revenue - Cost
Assume all potential customers = 100

Assume Price = \$1
1st class mail profit = (\$1x100)-(\$0.5x100) = \$50
3rd class mail profit = (\$1x80)-(\$0.4x80) = \$48

Assume Price = \$0.80
1st class mail profit = (\$0.8x100)-(\$0.5x100) = \$30
3rd class mail profit = (\$0.8x80)-(\$0.4x80) = \$32

Assume Price = \$0.90
1st class mail profit = (\$0.9x100)-(\$0.5x100) = \$40
3rd class mail profit = (\$0.9x80)-(\$0.4x80) = \$40

Anonymous on Aug 2, 2016
0

Must also consider response of 3rd class versus 1st class-perception

Anonymous on Sep 14, 2016