Kamal Fatehl, production manager of Kennesaw Manufacturing, finds his profit at $ 15,000 ( as shown in the state-ment below)€” inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Kamal would like to improve the profit line to $ 25,000 so he can obtain the bank€™s approval for the loan.

a) What percentage improvement is needed in a supply chain strategy for profit to improve to $ 25,000? What is the cost of material with a $ 25,000 profit?
b) What percentage improvement is needed in a sales strategy for profit to improve to $ 25,000? What must sales be for profit to improve to $25,000?

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% OF SALES Sales Cost of supply chain purchases Other prodxtion costs Fixed costs Profit $250,000 175,000 30,000 30,000 15,000 100% 0% 12% 12% 6%