S&RM is interested in exploring the impact effective supply chain management would have. Suppose that for every $1 of sales, 10% is profit, 35% is spent in the supply chain, and the remaining 55% is evenly divided between fixed and production costs. If the chain can save $1 in the supply chain it would take how many dollars of increased sales to have the same increase in profit? Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (37.5% profit margin combined now).

Answer: Suppose initially the firm sells $100 of merchandise. $35 is spent in the supply chain, $27.5 in fixed costs, $27.5 in variable costs, and $10 is profit.

Show solution in Excel. 2 decimal places.