Hau Lee Furniture, Inc., spends 45% of its sales dollars in the supply chain and finds its current profit of $15,000 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 $20,000 so he can obtain the bank's approval for the loan. Sales Cost of material Current Situation $100,000 $45,000 (45%) Production costs Fixed cost Profit $25,000 (25%) $15,000 (15%) $15,000 (15%) a) What percentage improvement is needed in the supply chain strategy for profit to improve to $20,000? What is the cost of material with a $20,000 profit? A decrease of ☐ % in material (supply-chain) costs is required to yield a profit of $20,000, for a new material cost of (Enter your response for the percentage decrease to one decimal place and enter your response for the new material cost as a whole number.)

Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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Hau Lee Furniture, Inc., spends 45% of its sales dollars in the supply chain and finds its current profit of $15,000
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 $20,000 so he can obtain the bank's approval for the loan.
Sales
Cost of material
Current Situation
$100,000
$45,000 (45%)
Production costs
Fixed cost
Profit
$25,000 (25%)
$15,000 (15%)
$15,000 (15%)
a) What percentage improvement is needed in the supply chain strategy for profit to improve to $20,000? What is the
cost of material with a $20,000 profit?
A decrease of ☐ % in material (supply-chain) costs is required to yield a profit of $20,000, for a new material cost of
(Enter your response for the percentage decrease to one decimal place and enter your response for the new
material cost as a whole number.)
Transcribed Image Text:Hau Lee Furniture, Inc., spends 45% of its sales dollars in the supply chain and finds its current profit of $15,000 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 $20,000 so he can obtain the bank's approval for the loan. Sales Cost of material Current Situation $100,000 $45,000 (45%) Production costs Fixed cost Profit $25,000 (25%) $15,000 (15%) $15,000 (15%) a) What percentage improvement is needed in the supply chain strategy for profit to improve to $20,000? What is the cost of material with a $20,000 profit? A decrease of ☐ % in material (supply-chain) costs is required to yield a profit of $20,000, for a new material cost of (Enter your response for the percentage decrease to one decimal place and enter your response for the new material cost as a whole number.)
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