Expert: Chanda Walker - 3/3/2009

Question
If I am trying to determine the overalls savings I acheieved in a new program I introduced to my company related to print and the savings was as follows in each category.

Stationery 35% savings withnew pricing
Forms  11% savings with new pricing
Miscelaneous items 12%

When I received my 2008 total spend it was determine that
73% of my spend was forms (savings of 11%), 11% was busines cards (35% savings) and 16% was miscelanneous (12% savings)

How do I calculate the weighted average of savings in the total program?

Answer
Let x be your previous spending.  Just so you know . . .

forms = x*.73
bc = x*.11
misc = x*.16

x = x(.73 + .11 + .16)

These sum to 100% that all good.

Now, your new spending looks like this.

y = x(.73*(1 - .11) + .11*(1 - .35) + .16*(1 - .12))
y = x(.73*.89 + .11*.65 + .16*.88)
y = x(.6497 + .0715 + .1408)
y = x(.862)

y/x = .862

1 - .862 = .138

13.8% savings from the total program