(10) Kamal Fatehl. Droduction manager of Kennesaw Manufacturing, finds his profi

Question

(10) Kamal Fatehl. Droduction manager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown below) inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a load 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. $250,000 175,000 | %Sales 100% 70% Sales Cost of supply chain purchases Other production 30,000 costs Fixed costs Profit 12% 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?

Explanation / Answer

The supply chain cost in order to bring over a profit of 25000 from 15000 has to drop by 10000 and thus the pecentage should be 64 and not 70. And for the cost of material that comes under the fixed cost should reduce to 20000 i.e 8% .

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