Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and finds its current profit of $12,000 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 $17,000 so he can obtain the bank’s approval for the loan. 

	Current Situation	Percent of sales
Sales	80,000
Cost of material	40,000	(50%)
Production cost	20,000	(25%)
Fixed cost	8,000	(10%)
Profit	12,000	(15%)

a.) What percentage improvement is needed in the supply chain strategy for profit to improve to $17,000? What is the cost of material with a $17,000 profit? A decrease of __% in material(supply-chain) costs is required to yield a profit of $17,000, for a new material cost of $ __ . 

b.) What percentage improvement is needed in the sales strategy for profit to improve to $17,000? What must sales be for profit to improve to $17,000? An increase of __% in sales is required to yield a profit of $17,000, for a new level of sales of $___. 

Answer rating: 100% (QA)

Part a Existing Profit 12000 Desirable Profit 17000 Upgrade required 17000 12000 500... View the full answer