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Problem 13.21: At the end of 2014, Mejorar Company implemented a low-cost strategy to improve its competitive position. Its objective was to become the low-cost

Problem 13.21: At the end of 2014, Mejorar Company implemented a low-cost strategy to improve its competitive position. Its objective was to become the low-cost producer in its industry. A balanced scorecard was developed to guide the company toward this objective. To lower costs, Mejorar undertook a number of improvement activities such as JIT production, total quality management, and activity-based management. Now, after two years of operation, the president of Mejorar wants tome assessment of the achievements. To help provide this assessment, the following information on one product has been gathered.

2014 2016

Theoretical annual capacity 249,600 249,600

Actual production 208,000 234,000

Market size (in units sold) 1,300,000 1,300,000

Production hours available (40 workers) 104,000 104,000

Very satisfied customers 83,200 140,400

Actual cost per unit 325 260

Days of inventory 15.6 7.8

Number of defective units 13,000 5,200

Total worker suggestions 104 312

Hours of training 260 1,040

Selling price per unit 195 195

Number of new customers 5,200 26,000

Required: 1. Compute the following measures for 2014 & 2016

a. actual velocity and cycle time

b. percentage of total revenue from new customers (assume one unit per customer)

c. percentage of very satisfied customers (assume each customer purchases one unit)

d. Market share

e. Percentage change in actual prodcut cost (for 2016 only)

f. Percentage change in days of inventory (for 2016 only)

g. Defective units as a percentage of total units produced

h. Total hours of training

i. Suggestions per production worker

j. Total revenue

k. Number of new customers

2. For the measures listed in Requirement 1, list likely strategic objectives, classified according to the four Balance Scorecard perspective. Assume there is one measure per objective.

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