Calculate ROI Pay Back

Explanation

Use this function to calculate return on investment with the Pay Back method for the defined Kaizen activity.

Prerequisites

This activity has the following prerequisites:

• Kaizen cost plan needs to be defined.
• The Pay Back return on investment method has to be selected.

System Effects

This activity will calculate the return on investment for the selected line item and evaluate whether it will be approved or not according to the required Pay Back period.

Window

Part Cost

Related Window Descriptions

Pay Back

Procedure

1. Open the Part Cost/Kaizen Cost tab.
2. Select a line with the Pay Back ROI Method, right-click and then click Calculate ROI.
3. The Pay Back dialog box appears.
4. In the ROI Period field, enter a return on investment period.
5. In the Financial Rate (%) field, enter a financial rate.
6. In the Cost Reduction field, enter a cost reduction value.
7. Enter a production rate in the Production Rate field. Now, the savings will be calculated, and displayed in the Saving field.
8. Enter a depreciable investment in the Depreciable field.
9. Enter a sunk investment in the Sunk field. Now, the total investment will be calculated, and displayed in the Total Investment field.
10. Enter the required return on investment in the Required ROI field.
11. Calculate the return on investment with the Pay Back method to receive the result in the Earned Value and Pay Back fields. If approved, the Approved check box will be selected.
12. Adjust a value by erasing the requested field value. If the default value is requested again, click Get Defaults. The default value will be shown, and a recalculation is done.