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 40. 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 $500. The company estimates that for every 1% decrease in the percentage of customers who shop again, future profit decreases by $4,000 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 $3,000 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 27.5. Average shipping time (hours from shipped to delivered) is 16.3. Number of erroneous shipments is 80.

BuyFind

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
BuyFind

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

Solutions

Chapter
Section
Chapter 14, Problem 10E
Textbook Problem

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 40.
  • 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 $500.
  • The company estimates that for every 1% decrease in the percentage of customers who shop again, future profit decreases by $4,000 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 $3,000 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 27.5.
  • Average shipping time (hours from shipped to delivered) is 16.3.
  • Number of erroneous shipments is 80.

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Chapter 14 Solutions

Managerial Accounting
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