12. The Forsite Company is screening three ideas for newservices. Resource constraints allow only one idea to becommercialized at the present time. The following esti-mates have been made for the five performance criteriathat management believes to be most important:RATINGPerformance CriterionService AService BService C0.80.3Capital equipmentinvestment required0.60.70.30.9Expected return oninvestment (ROI)Compatibility withcurrent workforce skills0.40.70.5Competitive advantage1.00.40.6Compatibility with EPArequirements0.21.00.514a. Calculate a total weighted score for each alternative. Usea preference matrix and assume equal weights for eachperformance criterion. Which alternative is best? Worst?b. Suppose that the expected ROI is given twice theweight assigned to each of the remaining criteria.(The sum of weights should remain the same as inpart [a].) Does this modification affect the ranking ofthe three potential services?BL

Preference matrix: It is a table showing the comparison of alternatives according to their…

Answered: de for the five perforr lieves to be…

Business

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de for the five perforr lieves to be most imp RATING

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter13: The Balanced Scorecard: Strategic-based Control

Section: Chapter Questions

Problem 4E: The following comment was made by the CEO of a company that recently implemented the Balanced...

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Question

12. The Forsite Company is screening three ideas for new
services. Resource constraints allow only one idea to be
commercialized at the present time. The following esti-
mates have been made for the five performance criteria
that management believes to be most important:
RATING
Performance Criterion
Service A
Service B
Service C
0.8
0.3
Capital equipment
investment required
0.6
0.7
0.3
0.9
Expected return on
investment (ROI)
Compatibility with
current workforce skills
0.4
0.7
0.5
Competitive advantage
1.0
0.4
0.6
Compatibility with EPA
requirements
0.2
1.0
0.5
14
a. Calculate a total weighted score for each alternative. Use
a preference matrix and assume equal weights for each
performance criterion. Which alternative is best? Worst?
b. Suppose that the expected ROI is given twice the
weight assigned to each of the remaining criteria.
(The sum of weights should remain the same as in
part [a].) Does this modification affect the ranking of
the three potential services?
BL

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