For a process improvement project, Return on Investment (ROI) is calculated by?

The correct method to calculate Return on Investment (ROI) involves comparing the profit or savings generated by an investment to the cost of that investment. In this context, ROI is considered a measure of the efficiency or profitability of an investment.

To calculate ROI, the formula is:

ROI = (Net Savings or Profit) / (Cost of Investment)

In the context of the options provided, ROI as stated in the correct choice is calculated by dividing the project savings by the project cost. This means that if a project results in certain monetary savings, you take that figure and divide it by how much was spent on the project. The result indicates how many dollars of savings are generated for every dollar spent, thereby assessing the project's effectiveness and financial return.

Understanding this concept is crucial for process improvement projects, as it helps stakeholders make informed decisions regarding which projects to pursue based on their potential financial return relative to their costs.