In 2009 it was decided that ABC Tire Company would implement a BPM project with

Question

In 2009 it was decided that ABC Tire Company would implement a BPM project with the goal to decrease the manufacturing cost per tire and increase revenue from each tire sold.
To track the success (or failure) of the project they determined the following baseline data for 2009.

Total # of Tires Sold 24,594

Materials Cost Per Tires $23.21

Labor Cost Per Tire $ 11.67

Average Retail Price Per Tire $ 119.00

Average Profit Per Tire $ 84.12

After implementing the BPM project ABC Tire Company reviewed the value of the project after a year and identified the following information

Total # of Tires Sold 27.669

Total Materials Cost $672,080.32

Total Labor Cost $ 303,280.56

Average Retail Price Per Tire $121.13


Using the data provided above calculate and provide

( 1) Materials Cost Per Tire (2) Labor Cost Per Tire (3) Average Profit Per Tire (4) % Increase or Decrease in Materials cost Per Tire (5) % Increase or Decrease in Labor cost Per Tire (6) % Increase or Decrease in Average Profit Per Tire

Address the following questions:
Why is it important to ensure baseline data is accurate?
Was the project successful?

Explanation / Answer

1)Materials Cost Per Tire = 672,080.32/27,669 =$24.29 2)Labor Cost Per Tire = 303,280.56/27,669 = $10.96 3)Average Profit Per Tire = 121.13 -24.29-10.96 =$ 85.88 4)% "increase" in Materials cost Per Tire = [(24.29-23.21)/23.21]x100 = 4.653% increase 5)% " Decrease" in Labor cost Per Tire = [(11.67- 10.96)/11.67]x100 = 6.0839% decrease 6)% Increase in Average Profit Per Tire = [(85.88 - 84.12)/84.12]x100 = 2.09% increase Why is it important to ensure baseline data is accurate? because baseline data may be used later to provide a comparison forassessing program outcomes or impacts it is important yes the program is a success since they managed 2.09% increase in profit

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