B3

Question 1

What is the difference between total and partial productivity ratios?

Answer 1

total productivity ratios - consider all prices and inputs

partial productivity ratios - focused on the quantity of a single input without any concern for the price

Question 2

What are some issues with ROI and ROA?

Answer 2

1. Net Book Value
   -skewed by age of the assets and method of depreciation (i.e., it’s hard to compare your new assets to a company that has almost fully depreciated assets)
2. Gross Book Value
   -skewed by only age of the assets
3. Liquidation value
   -used for bankruptcy cases; what is the cost to sell?

Ideal: replacement cost (value goes up, ROI goes down)

Question 3

Limitations of ROI

Answer 3

short-term focus and disincentive to invest
- b/c you want a higher ROI for higher sales that can go to your salary if you’re a manager; increasing investments increases the denominator which reduces ROI (which you’re trying to avoid in the short-term)

Question 4

What is the difference between a fishbone and pareto diagram?

Answer 4

pareto: used to prioritize process improvement efforts; bar graph (histogram) for individual efforts and a line graph for cumulative efforts

fishbone: contributions and problems to a process (determining the source of the problem based on chronological phase)

Question 5

What is the difference between benchmarking and a balanced scorecard?

Answer 5

benchmarking = determine the standards based on the best practices from the industry

balanced scorecard = separate activities of the organization into major headers and assess how the organization will meet the critical success factors (1. financial 2. internal business processes 3. customer service/satisfaction 4. human capital / learning/ HR