Chapter 22, Problem 22.22EX

Nonfinancial performance measures

Diamond Inc. is an Internet retailer of woodworking equipment. Customers order woodworking 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 per 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

1. A. For each performance measure, identify it as either an input or output measure related to the “order placement and delivery” process.
2. B. Provide an explanation for each performance measure.