TEMPES CORPORATION (A)

This case study describes a strategic design choice facing Tempes Corporation, a manufacturer of precision equipment for extreme sports and scientific research. The company is deciding between two designs for its 'Water Moccasin' deep-sea diving monitor: Design A, which uses traditional acrylic polymer and cadmium coating, and Design B, which utilizes a more expensive but recyclable engineering thermoplastic. The document provides detailed capital costs, operating assumptions, and financial parameters to facilitate a net present value (NPV) and internal rate of return (IRR) analysis.

• Tempes Corporation is a leader in the market for precision equipment used in extreme sports—such as SCUBA diving, rock climbing, and rappelling—and scientific research in deep sea and Antarctic conditions. The company's worldwide annual sales for 1994 exceeded $40 million, with approximately one third of revenues coming from the European market following a 1981 distribution agreement with a Swiss manufacturer.
• The Water Moccasin monitor is a deep-sea diving instrument that tracks depth, pressure, temperature, and elapsed time, and calculates the time remaining before a diver faces health risks. It also measures ionic concentrations of zinc, potassium, and sodium.
• Design A for the Water Moccasin uses acrylic polymer and cadmium coating to prevent corrosion. This design is easier to repair due to its three-section construction but generates hazardous waste; cadmium is specifically classified as a hazardous waste by the EPA.
• Design B utilizes a recyclable engineering thermoplastic that allows the base and head to be molded as one piece, reducing the risk of leaks. While the raw material is 50% more expensive than the acrylic polymer used in Design A, a recycling loop reduces the overall material cost premium to approximately 23%.
• Market projections for the Water Moccasin estimate first-year sales of 14,000 units with an annual growth rate of 10% over an eight-year product life span. Design B is expected to command a higher price ($615 per unit) compared to Design A ($550 per unit) due to its leak-proof characteristics and aesthetics.
• The financial analysis for the project assumes a cost of capital of 15% and a tax rate of 34%, with investments financed through retained earnings. Capital costs for Design A include $13,000,000 for production equipment, while Design B requires $12,500,000 for production equipment plus $3,500,000 for recycling equipment.

APA

Jr., L. M., Lovejoy, W., Cummings, C. A., Sastry, A., & Jacoby, H. (1995). TEMPES CORPORATION (A). World Resources Institute. https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf

Chicago

Jr., Lawrence Molinaro,, William Lovejoy, Christopher A. Cummings, Anjali Sastry, and Henry Jacoby. TEMPES CORPORATION (A). World Resources Institute, 1995. https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf.

Wikipedia

{{cite report |last1=Jr. |first1=Lawrence Molinaro, |last2=Lovejoy |first2=William |last3=Cummings |first3=Christopher A. |last4=Sastry |first4=Anjali |last5=Jacoby |first5=Henry |title=TEMPES CORPORATION (A) |publisher=World Resources Institute |date=1995 |url=https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jr1995tempes, author = {Jr., Lawrence Molinaro, and Lovejoy, William and Cummings, Christopher A. and Sastry, Anjali and Jacoby, Henry}, title = {{TEMPES CORPORATION (A)}}, institution = {World Resources Institute}, year = {1995}, url = {https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }