Six Sigma Black Belt Certified Practice Exam

A six sigma project to reduce billing statement expenses has shown the need to hire two additional mailroom clerks. Which of the following metrics should be used to measure the financial benefits of the project?

1. Cost of poor quality

2. Return on investment

3. Net present value

4. Internal rate of return

The correct answer is: Return on investment

In this scenario, using return on investment (ROI) as the metric to measure the financial benefits of the project is highly appropriate. ROI quantifies the financial return generated from an investment relative to its cost, making it a direct measure of the project's effectiveness in creating value. In the case of adding two mailroom clerks, the costs associated with their salaries and potential training will need to be assessed against the savings or increased efficiency realized from reduced billing statement expenses. By calculating ROI, you can determine whether the investment in additional staffing leads to a financial gain that justifies the expense. This metric helps stakeholders understand the profitability of the investment and aids in making informed decisions about future projects and resource allocation. The other metrics, while important in their own contexts, do not provide a straightforward assessment of the financial benefits resulting from this specific project. Cost of poor quality focuses on the expenses incurred due to inefficiencies or defects rather than measuring the value generated from a new investment. Net present value (NPV) takes into account the time value of money, which is useful for evaluating long-term projects, but may not be necessary for this scenario if the return on hiring clerks is expected to be immediate or short-term. Internal rate of return (IRR)