Winsor Corporation evaluates its managers based on return on investment (ROI). Sue Jenson and Ruth Sands, managers of the electronics and house wares departments respectively, have recently suffered from declining profits in their departments. Over lunch, they discuss the problem, and how they could improve performance. Most of the discussion centers on ways to increase sales. Near the end of the lunch period, however, Ruth remarks that there are two components to consider, and that they have considered only one. She wonders whether there is some way to reduce investment, and by decreasing the denominator of the ROI fraction, to improve the final result.
Back at work, Sue continues to think about Ruth's remarks. She decides to pursue the matter further, and before the end of the quarter she has sold quite a bit of older equipment and replaced it with equipment obtained with a short-term lease. Her performance, measured by ROI, is markedly improved, although sales continue to be disappointing.