Hau Lee Furniture, Inc., described in Example 1 of this chapter, finds its current profit of $10,000 inadequate.
The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Hau would like approval for the loan. to improve the profit line to S25,000 so he can obtain the bank's
a) What percentage improvement is needed in the supply chain strategy for profit to improve to $25,000? What is the cost of material with a $25,000 profit?
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Current Situation
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SupplyChain Strategy
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Sales Strategy
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|
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Sales
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S 100,000.00
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$ 100,000.00
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5125,000.00
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|
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Cost of materials
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$
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60,000.00
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60%
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$ 55,000.00
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55%
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$ 75,030.00
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60%
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Production Costs
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S
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20,000.00
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20%
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$ 20,000.00
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20%
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$ 25,000.00
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20%
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Fixed Costs Profit
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$
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10,030.00
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10%
10%
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$ 10,000.00
$ 15,000.00
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10%
15%
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$ 10,000.00
S 15,003.00
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8%
12%
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I $
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to,coo.00 I
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Supply Chain Management: The coordination of al supply chain activities involved in enhancing customer value. It starts with raw material and ends with customer satisfaction.
b) what percentage improvement is needed in the sales strategy for profit to improve to $25000? What must be sales profit to improve to $25,000?