Comments on operational competitiveness rating analysis

This note offers comments on Parkan and Wu based on an examination of their proposed operational competitiveness rating analysis (OCRA) method. Since the premise of the OCRA method is that the cost/revenue ratios must be known, costs and revenues cannot be measured in any units other than dollar value in any practical cases. This property makes the OCRA method faulty. Further, it is shown that the invalid weighting approach used in the OCRA method provides an illusion to management that a cost category with large cost/revenue ratio is more important than a cost category with small ratio. The conclusion is that a performance analysis using the OCRA method can be invalid.