Question

Hau Lee​ Furniture, Inc., spends 45​% 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
Sales	​$80,000
Cost of material	​$36,000(45​%)
Production costs	​$20,000(25​%)
Fixed cost	​$12,000(15​%)
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 ​$_____.

​(Enter your response for the percentage decrease to one decimal place and enter your response for the new material cost as a whole​ number.)

Answer 1