de for the five perforr lieves to be most imp RATING
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc3a5dee4-5b1b-4019-8837-262d44de249a%2Ffce4a98d-2d64-4de5-b559-3bd59b33c406%2Fbsctd2j_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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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