Hau lee furniture spends 50% of its sales dollars in the supply chain and finds its current profit of $20000 inadequate. The bank is insisting on an improved profit picture prior to approval of loan. He would like to improve profit line to $25000. So he can obtain the banks approval for loan.
Sales 80000
Cost of material $40000 (50%)
Production cost $16000(20%)
Fixed costs $4000(5%)
Profit $20000(25%)
A. What lerfectage improvement is needed in the supply chain strategy for profit to improve to $25000. What is the cost of material with a $25000 profit.
A decrease of ___% in material costs is required to yield a profit of $25000 for a new material cost of $___.
B. What percentage improvement is needed in the sales strategy for profit to improve to $25000. What must sales be for profit to improve to $25000.
An increase of ___% in sales is required to yield a profit of $25000 for a new level of sales of $___.