978-1111971724 Solution Manual Ch.14 Kinney 9e SM_Final Part 3

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 work days lost due to accidents

 percentage of appraisals completed on time

e. Inventory management (Internal Business Perspective)

 inventory turnover by product and group

 inventory days on hand

f. Lead time (Internal Business Perspective and Customer Perspective)

 delivery time to customers

 setup reduction trends

 in-house transit time

g. Responsive after-sale service (Customer Perspective)

 number of hours of field service training

 average response time to service calls

h. Customer satisfaction and retention (Customer Perspective)

 average customer response time

on time

 time from customer’s recognition of need to delivery

 quoted lead time

 customer order processing time

 time from receipt of order to start of manufacturing

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 time from idea to market

 rate of new product introduction

 percentage first firm to market

 number of engineering changes after design

 reduction in new product introduction lead time

 project completion cycle times

 number of errors found during design review and evaluation

j. Manufacturing planning process (Internal Business Perspective)

 master schedule items achieved per week

 final assembly schedule items achieved per week

 material requirement plans achieved per week

k. Procurement process (Internal Business Perspective)

 average procurement cycle time

 on-time performance of deliveries

 reduction in purchasing lead time

l. Manufacturing process (Internal Business Perspective)

 reduction of manufacturing lead time

 percentage queue time in manufacturing lead time

m. Management accomplishments (Financial Perspective)

 net income/number of employees

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 total sales/number of employees

 average lead time in backlog

 lead time performance

 premium freight outbound/total freight outbound

o. Delivery performance (Customer Perspective)

p. Financial accounting services (Internal Business Perspective)

 amount of non-value-added activity (scrap, rework, excess queue, and move

time)

 total value of usable finished product produced per period per employee

 total cost and output value ratios

 time-based overhead usage

 performance to budget

Management Quarterly (February 2001), pp. 54–63.

53. No solution provided. Each student will have a different answer, much of which

ity items may be in a separate perspective or included within the traditional four

56. No solution provided. Each student will have a different answer. However, the

following information was obtained from BSCs developed by the City of West

Des Moines.

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FINANCIAL PERSPECTIVE

Strategy

Measures

Provide positive customer relationships

• Approval scale in citizen survey

Pursue beneficial alliances

• Number of intergovernmental

agreements

Strengthen sense of community

• Number of hours for community

involvement

Provide sufficient infrastructure

• Average level of service (LOS) at

major intersections

• Approval scale on citizen survey

Provide a well-maintained community

• Number of code enforcement

citizen complaints

• Approval scale on citizen survey

Provide a safe community

• Approval scale on citizen survey

• Reduce crime statistics

• Increase traffic safety

Provide sufficient service and program

delivery

• Approval scale on citizen survey

CUSTOMER PERSPECTIVE

Strategy

Measures

Facilitate balanced economic

development

• Property tax valuation

• Ratio of full-time employees working

in city to the population of city

• Building permit valuation

Maintain/Improve bond rating

• Standard and Poor’s and Moody’s bond

rating

• Maximize cost/benefit of resources

Diversification of revenue sources

• Percent of operating revenue not from

operating tax

INTERNAL PROCESSES PERSPECTIVE

Strategy

Measures

Advance the quality initiative

• Percent of PATs (process action teams)

recommendations implemented

• Percent of PATs completed in less

than nine months

• Number of active PATs and citywide

process teams

Simplify customer processes

• Percent of online parks and recreation

registrations

• Percent of water bills paid by

nontraditional methods

Facilitate community-based problem

solving

• Number of hours where non-mandated

public input is sought

57. a. EVA could discourage a high-growth strategy because this strategy almost al-

ways requires that current profitability be reduced to achieve acceleration in

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b. Yes. The balanced scorecard could be used to provide incentives other than

high current profitability. Specifically, some performance measures (and re-

wards) could be devised for the customer perspective:

 market share or growth in market share,

 number of new products developed,

59. a. No solution provided. Each student will have a different answer. The seven core

areas are: beverage benefits, active healthy living, community, energy efficien-

b. No solution provided. Each student will have a different answer. It is, however,

likely that students will indicate there will be more difficulty in working toward the

60. No solution provided. Each student will have a different answer.

61. a. The evaluation measures are probably having a large effect on his decision. By

revealing the information about the obsolete inventory to the market, the stock

b. It is not an ethical treatment of either the existing shareholders or potential

shareholders. In the long run, both groups would be better off financially if the

information about the obsolete inventory were revealed to the capital markets.

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future.

c. The decision to defer disclosure until after the issuance of the stock is clearly an

inappropriate course of action for the company. If the president persists in this

view, the controller should go to the audit committee and reveal the problem to

62. The most important point to be made in the arguments is that increases in pay

should be related to increases in performance. The minimum wage bestows larger

maintain the status quo in operations.

higher minimum wage will be unemployed.

creating an incentive structure that rewards employees for higher productivity en-

courages the workers to work harder, improve their abilities, and acquire higher-

or other types of variable pay.

Two helpful Wall Street Journal articles related to this question were written by

63. a. Year 1: $600,000 salary

promote goal congruence.

c. In designing contracts, wealth-maximizing managers will commonly attempt to

been different.

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d. Many different performance features could be considered. For example, wage

penalties could be included for any NCAA rules infraction or violation of

job security are less directly tied to winning, violations of school policy and

NCAA rules are much less likely to occur.

65. a. When managers take actions that reduce long-term growth and profitability so

that higher short-term profits are reported, they are stealing value from share-

b. The board of directors should anticipate how various elements of compensation

will cause managers to act in their self interest. The tighter the incentives can be

66. a. Asset turnover is defined as Sales ÷ Average total assets. If the numerator is

held constant and the denominator is reduced, the resulting quotient (asset turn-

materials are toxic.

c. Jensen’s options include the following:

 Remain silent.

 Discuss the matter with the plant manager.

If Jensen remains silent, he can be considered an accomplice to the dumping

and, thus, would be as unethical as the plant manager. If he tries to talk to the

plant manager, Jensen may be able to convince the manager of the impropriety

of the dumping. Of course, it is also possible that the manager would ignore

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67. a. For 2013, FFV generated an ROI of 25 percent, as calculated below:

ROI = Operating income ÷ Total assets

= $4,000,000 ÷ $16,000,000

= 25% (rounded)

ROI = Operating income ÷ Total assets

= $1,200,000 ÷ $6,400,000

= 18.8% (rounded)

indicated below:

Combined ROI = Operating income ÷ Total assets

= $5,200,000 ÷ $22,400,000

= 23.2% (rounded)

Operating income

$1,200,000

Target return ($6,400,000  0.15)

960,000

Residual income generated by GGI

$ 240,000

c. No, it is the duty of top management to provide incentives to Peach such that if

it is in the best interest of Drummondville Automotive to invest, it is also in the

best interest of Peach to invest. Such is not the case with the ROI performance

measure.

68. To induce the candidate to accept the Buenos Aires assignment, she should be offered

incentives that make the assignment attractive relative to her current assignment. Be-

ny could provide housing for the family in Buenos Aires and assist the candidate in

selling her New York apartment. In addition to these incentives, the compensation

package she currently enjoys.

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To ensure that the candidate would perform at a high level if she accepts the posi-

tion, she should be offered incentive compensation. It would be appropriate to

so that the candidate has an incentive to achieve the goals of the company. Some

of these incentives should be tied to specific performance measures of the opera-

tion in Buenos Aires.

69. Each student will have a different answer. No solution is provided. However, stu-

labor, and pollution. Also, in defending lower wages, students should address the