Hau Lee Furniture, Inc., spends 60% of its sales dollars in the supply chain and 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 to improve the profit line to $25,000 so he can obtain the bank's approval for the loan. Current Situation Sales $100,000 Cost of material S60,000 (60%) $20,000 (20%) $10,000 (10%) S10,000 (10%) Production costs Fixed cost Profit 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? A 25 % decrease in material (supply-chain) costs is required to yield a profit of $25,000, for a new material cost of $ 45000. (Enter your responses as whole numbers.) b) What percentage improvement is needed in the sales strategy for profit to improve to $25,000? What must sales be for profit to improve to $25,000? A % increase in sales is required to yield a profit of $25,000, for a new new level of sales of $ (Enter your responses as whole numbers.)

Hau Lee Furniture, Inc., spends 60% of its sales dollars in the supply chain and 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 to improve the profit line to $25,000 so he can obtain the bank's approval for the loan. Current Situation Sales $100,000 Cost of material S60,000 (60%) $20,000 (20%) $10,000 (10%) S10,000 (10%) Production costs Fixed cost Profit 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? A 25 % decrease in material (supply-chain) costs is required to yield a profit of $25,000, for a new material cost of $ 45000. (Enter your responses as whole numbers.) b) What percentage improvement is needed in the sales strategy for profit to improve to $25,000? What must sales be for profit to improve to $25,000? A % increase in sales is required to yield a profit of $25,000, for a new new level of sales of $ (Enter your responses as whole numbers.)

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

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