CALCULATING RETURN ON INVESTMENT FOR CONTINUOUS IMPROVEMENT ACTIVITIES: A MODEL AND A CASE STUDY

Calculating the Rate on Investment (ROI) could be a challenge in an everchanging environment. There is no existing model in the literature studies that measure the financial effectiveness of continuous improvement (CI) activities. This research aims to explain a framework model to link financial measures with performance measures. The model can be used to determine the financial impact of continuous improvement (CI) activities. By following the proposed framework, managers can calculate return on investment (ROI) of CI activities. This paper highlighted the equations and parameters that are needed to conduct the analysis process. The proposed framework is tested using a real case study from the bearing industry to demonstrate its usefulness. It is proven that this framework is useful to organizations to support their CI efforts and to evaluate their achievements.