Kamal Fatehl, production manager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown in the statement 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.
% of sales
Sales
250,000
100%
Cost of supply chain purchases
Other production costs
175,000
70%
30,000
12%
Fixed costs
Profit
30,000
15,000
12%
6%
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?
A decrease of 5.7 % in supply-chain costs is required to yield a profit of $25,000, for a new cost of supply chain purchases of $ 165000. (Enter your response for the
percentage decrease to one decimal place and enter your response for the new supply chain cost as a whole number.)
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?
An increase of % in sale is required to yield a profit of $25,000, for a new new level of sales of $(Enter your response for the percentage increase to one decimal
place and enter your response for the new sales as a whole number.)
