Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and

ID: 463725 • Letter: H

Question

Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and finds its current profit of $20,000 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$25,000sohecan obtain the bank's approval for the loan. What percentage improvement is needed in the supply chain strategy for profit to improve to $25,000? What is the cost of material with a $25,000 profit? A decrease of % in material (supply-chain) costs is required to yield a profit of $25,000. 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)

Explanation / Answer

For Profit of $25000, Cost of Material must decrease by $5000.

% decrease in material cost = (5000/40000)*100 = 12.5%

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Hau Lee Furniture, Inc., spends 45% of its sales dollars in the supply chain and

Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and

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Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and

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