The annual cost and an effectiveness measure of items salvaged per year for four mutually exclusive, service sector alternatives have been collected. Calculate (a) the cost effectiveness ratio for each alternative, and (b) use the CER to identify the best alternative.
 FIGURE 1.png)
(a) CERW = 355/20 = 17.8
CERX = 208/17 = 12.2
CERY = 660/41 = 16.1
CERZ = 102/7 = 14.6
(b) Order alternatives according to E: Z, X, W, Y; perform incremental comparison.
Z to DN: 14.6 Basis for comparison
X to Z: ?C/E = (208 – 102)/(17 – 7) = 10.6 < 14.6
Z is dominated; eliminate Z
W to X: ?C/E = (355 – 208)/(20 – 17) = 49 > 12.2
Keep W and X; W is new defender
Y to W: ?C/E = (660 – 355)/41 – 20) = 14.5 < 17.8
W is dominated; eliminate W
Only X and Y remain.
Y to X: ?C/E = (660 – 208)/(41 – 17) = 18.8 > 12.2
No dominance; both X and Y are acceptable; final decision made on other criteria.
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