Question

Measure Maps

Silver Lining Inc. has a balanced scorecard with a strategy map that shows that delivery time and the number of erroneous shipments are expected to affect the company’s ability to satisfy the customer. Further, the strategy map for the balanced scorecard shows that the hours from ordered to delivered affects the percentage of customers who shop again, and the number of erroneous shipments affects the online customer satisfaction rating. The following information is also available:

• The company’s target hours from ordered to delivered is 20.
• Every hour over the ordered-to-delivered target results in a 0.5% decrease in the percentage of customers who shop again.
• The company’s target number of erroneous shipments per year is no more than 65.
• Every error over the erroneous shipments target results in a 0.5 point decrease in the online customer satisfaction rating and an added future financial loss of $700.
• The company estimates that for every 1% decrease in the percentage of customers who shop again, future profit decreases by $3,000 and market share decreases by 0.3%.
• The company also estimates that for every 1 point decrease in the overall online customer satisfaction rating (on a scale of 1 to 10), future profit decreases by $2,000 and market share decreases by 0.6%.

Using these estimates, determine how much future profit and future market share will change if:

• Average hours from ordered to shipped is 28.5.
• Average shipping time (hours from shipped to delivered) is 14.3.
• Number of erroneous shipments is 80.

Total decrease in future profit $

Round your answer to two decimal places.

Total decrease in future market share %

Answer 1

Working Note 1 :

Compute the avg hours fron ordered to delivery = hours from ordered to shipped + Hours from shipped to delivered = 28.5 + 14.3 = 42.8 hours

The hours above the Target avg delivery time is ( 42.8 – 20 ) = 22.8 hours

Note 2:

Therefore , Total decrease in % of customers who shop again = 22.8 * 0.5 % = 11.4 %

For every 1 % decrease in customers who shop again , future profits decrease by $ 3000

Therefore , Total decrease in future profits due to decrease in customers who shop again

= $ 3000 * 11.4 = $ 34200

Note 3:

Decrease in market share due to above = 11.4 * 0.3 % = 3.42 %

Note 4:

Co ‘s Target no of erroneous shipment = 65

Actual no of erroneous shipment = 80

Above the taget error = 80 – 65 = 15

Thereofre , Decrease in online customer satisfcation rating = 15 * 0.5 = 7.5 points

And , future profit decrease due to above = 7.5 * 2000 = $ 15000

And , Added future financial loss due to erroneous shipment = 15 * $ 700 = $ 10500

Decrease in Market share due to Customer dis-satisfaction = 7.5 * 0.6 = 4.5 %

Ans : 1 ) Total decrase in future profits

Due to customer who shop again            =   34200   ( Note 2 )

Due to erroneous shipment                      =   10500   ( Note 4 )

Due to online customer dis-satisfaction =   15000   ( Note 4 )

Total decrase in future profits                     $ 59700

2) Total decrease in future market share

Due to customer who shop again                 = 3.42 %

Due to online customer dis-satisfaction      = 4.5 %

Total                                                                     7.92 %