A quality manager recommends spending $10,000 to eliminate product failures that are costing the company SI 5.000 per year. What is expected the return on investment (ROI) for this proposal?
The quality manager’s recommendation involves spending $10,000 to eliminate product failures that currently cost the company $15,000 per year. To determine the expected return on investment (ROI), we use the formula mentioned above. The annual savings from eliminating failures are $15,000, and the investment cost is $10,000. Calculating the ROI yields a value of 150%, indicating a positive return on the proposed investment12.
References:
The ASQ Certified Manager of Quality/Organizational Excellence Handbook, Fifth Edition. Sandra L. Furterer and Douglas C. Wood. Published 2021. ISBN: 9781951058067. Item Number: H1569.
ASQ Certified Manager of Quality/Organizational Excellence (CMQ/OE) Body of Knowledge (BoK). ASQ Quality Press.13
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