Problem 23 - Accounting

Question

Under Par, Inc., is an Internet retailer of golf equipment. Customers order golf equipment from the company, using an online catalog. The company processes these orders and delivers the requested product from its warehouse. The company wants to provide customers with an excellent purchase experience in order to expand the business through favorable word-of-mouth advertising and to drive repeat business. To help monitor performance, the company developed a set of performance measures for its order placement and delivery process. Average computer response time to customer "clicks" Dollar amount of returned goods Elapsed time between customer order and product delivery Maintenance dollars divided by hardware investment Number of customer complaints divided by the number of orders Number of misfilled orders divided by the number of orders Number of orders par warehouse employee Number of page faults or errors due to software programming errors Number of software fixes per week Server (computer) downtime Training dollars per programmer a. For each performance measure, identify it as either an input or output measure related to the "order placement and delivery" process. b. Provide an explanation for each performance measure.

Step-by-Step Solution

Answer

Input measures: Steps 2, 5, 8, 9, 10, 11, 12. Output measures: Steps 3, 4, 6, 7.

Step 1: Understanding Input vs. Output Measures

Input measures refer to the resources or efforts used in a process, while output measures relate to the results or products of the process. In the context of the order placement and delivery process, we must analyze whether each measure reflects the resources/input or the outcome/output of this process.

Step 2: Analyze the Average Computer Response Time to Customer Clicks

This is an input measure because it assesses the efficiency of the systems in place to process customer interactions.

Step 3: Review the Dollar Amount of Returned Goods

This is an output measure as it concerns the results of the order process, specifically reflecting customer satisfaction and product quality.

Step 4: Evaluate the Elapsed Time Between Customer Order and Product Delivery

This is an output measure. It represents the efficiency of the entire order processing and delivery system from start to end.

Step 5: Consider the Maintenance Dollars Divided by Hardware Investment

This is an input measure, referring to the resources spent on maintaining the hardware used in order processing.

Step 6: Assess the Number of Customer Complaints Divided by the Number of Orders

This is an output measure, indicating the outcome in terms of customer satisfaction with the order process.

Step 7: Look at the Number of Misfilled Orders Divided by the Number of Orders

Also an output measure, it reflects the accuracy and effectiveness of the order fulfillment process.

Step 8: Number of Orders Per Warehouse Employee

This is an input measure because it assesses the efficiency of labor resources used in the process.

Step 9: Examine Number of Page Faults or Errors Due to Software Programming Errors

This is an input measure as it relates to the quality and efficiency of software used in processing orders.

Step 10: Review the Number of Software Fixes Per Week

Considered an input measure, since it relates to the ongoing maintenance and improvement of the software systems.

Step 11: Analyze the Server (Computer) Downtime

An input measure, as it impacts the ability to process orders efficiently.

Step 12: Consider Training Dollars Per Programmer

This is an input measure related to the investment in human resources to ensure efficient processing and software development.

Key Concepts

Input Measures

In business processes, input measures are metrics that evaluate the resources or efforts allocated to a specific task. They help companies understand how much investment is being put into the processes. For "Under Par, Inc.", input measures include:

• Average Computer Response Time to Customer Clicks: This measures system efficiency and the responsiveness of the platform when customers interact with it.
• Maintenance Dollars Divided by Hardware Investment: Indicates the resources allocated for maintaining the infrastructure, crucial for seamless order processing.
• Number of Orders Per Warehouse Employee: Evaluates labor resource efficiency in handling and preparing orders for shipment.
• Number of Page Faults or Errors Due to Software Programming Errors: Reflects the quality and reliability of the software systems in place.

Employing effective input measures allows a business to optimize its resource management and improve its overall operational efficiency.

Output Measures

Output measures provide insight into the performance and outcomes of business processes. They reflect results that are directly observable and measurable. In the order placement and delivery for "Under Par, Inc.", these measures include:

• Dollar Amount of Returned Goods: Indicates customer satisfaction and the quality of products being delivered.
• Elapsed Time Between Customer Order and Product Delivery: Reflects the timeliness and efficiency of the entire order process.
• Number of Customer Complaints Divided by the Number of Orders: This metric highlights areas of dissatisfaction among customers.
• Number of Misfilled Orders Divided by the Number of Orders: Shows the accuracy of the order fulfillment process, a key component of customer satisfaction.

By analyzing these output measures, businesses can make informed decisions to enhance service quality and customer experience.

Order Processing Efficiency

Achieving high order processing efficiency means delivering customer orders accurately and promptly. Businesses strive to reduce errors and delays, ultimately enhancing the overall customer experience. Key factors impacting order processing efficiency are:

• Utilizing software programs that reduce errors and streamline operations.
• Training employees to maximize productivity and effectiveness in order handling.
• Maintaining hardware to minimize downtimes and ensure uninterrupted order processing.

Efficient processing not only improves customer satisfaction but also drives operational cost savings and optimizes time management.

Customer Satisfaction

Customer satisfaction serves as a pivotal measure of a business's success in fulfilling customer expectations. Satisfied customers are more likely to become repeat buyers and promote the business through positive word-of-mouth. Factors influencing customer satisfaction include:

• Timeliness and accuracy of order delivery.
• Ease of the ordering process and system reliability.
• Product quality and whether it conforms to customer expectations.

Collecting and analyzing feedback, such as customer complaints, helps businesses identify areas for improvement, paving the way for higher customer loyalty.

Resource Management in Business

Resource management involves strategically using resources such as labor, technology, and capital to improve business processes and outcomes. Efficient resource management ensures optimum performance levels by aligning resource deployment with business goals. Important components include:

• Investing in employee training to enhance skill levels and performance.
• Regularly updating hardware and software to keep technological resources efficient and reliable.
• Monitoring and managing the performance metrics to effectively adjust resource allocation.

By carefully managing resources, businesses can achieve significant improvements in productivity, quality, and overall strategic success.