Example Problem Statement
In the first quarter, the California distribution center sent 108,000 packages. Of those packages, 15,000 were returned, resulting in a 13.8 percent return rate. The rate of return is above the accepted 7 percent rate and cost the company an additional $372,000 for the quarter. Over the course of the year, the current process could result in additional costs of over $1.4 million.
This problem statement covers all the basic information:
- When? During the first quarter of this year.
- Where? The California distribution center
- What? Returns
- How many? 15,000, or 6.8 percent above expectations
- What is the magnitude? The cost could be $1.4 million a year