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Business Objective

To contain the expenses associated with weak service. Specifically, reduce the number of orders replaced per day from 5 to 1 per day, the number of billing errors from 7 to 0 per day, and the number of dissatisfied customers from 2 to 0.25 per day.

• Estmated costs of errors: replacing an order--$US 5.95/order, billing errors--$1.75/order, the average cost of a dissatisfied customer--$25.45/customer.
• Estimated weekly cost of errors now is $410.20 (that's $41.65 per week for orders replaced, $12.25 for billing errors, and $356.30 (cost of dissatisfied customers)li>
• Targets for improvement: weekly savings of $324.03 (based on $5.95 saved per day by avoiding the need to replace orders and $6.36 saved per day by minimizing the number of dissatisfied customers. Total cost is $86.17/week, which represents a $324.03 savings over the previous cost of $410l.20).

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