Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $13,000 (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 profit line to $23,000 so he can obtain the bank's approval for the loan. % of sales Sales Cost of supply chain purchases 260,000 187,200 28,600 31,200 13,000 100% 72% Other production costs 11% Fixed costs 12% Profit 5% a) What percentage improvement is needed in a supply chain strategy for profit to improve to $23,000? What is the cost of material with a $23,000 profit? A decrease of % in supply-chain costs is required to yield a profit of $23,000, for a new cost of supply chain purchases of S. (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 $23,000? What must sales be for profit to improve to $23,000? An increase of % in sales is required to yield a profit of $23,000, for a new new level of sales of S. (Enter your response for the percentage increase to one decimal place and enter your response for the new sales as a whole number.)
Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $13,000 (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 profit line to $23,000 so he can obtain the bank's approval for the loan. % of sales Sales Cost of supply chain purchases 260,000 187,200 28,600 31,200 13,000 100% 72% Other production costs 11% Fixed costs 12% Profit 5% a) What percentage improvement is needed in a supply chain strategy for profit to improve to $23,000? What is the cost of material with a $23,000 profit? A decrease of % in supply-chain costs is required to yield a profit of $23,000, for a new cost of supply chain purchases of S. (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 $23,000? What must sales be for profit to improve to $23,000? An increase of % in sales is required to yield a profit of $23,000, for a new new level of sales of S. (Enter your response for the percentage increase to one decimal place and enter your response for the new sales as a whole number.)
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Can you assit me with this problem 12 by showing me the process step by step. I prefer it not be in the form of an excel sheet because it is hard to follow along. Thank you kindly
Transcribed Image Text:Kamal Fatehi, the production manager of Kennesaw Manufacturing, is seeking to improve the company's profit from $13,000 to $23,000 to secure a bank loan for new equipment. The current financial breakdown is as follows:
- **Sales**: $260,000 (100% of sales)
- **Cost of supply chain purchases**: $187,200 (72% of sales)
- **Other production costs**: $28,600 (11% of sales)
- **Fixed costs**: $31,200 (12% of sales)
- **Profit**: $13,000 (5% of sales)
**Questions:**
a) **Supply Chain Strategy Improvement**
- What percentage decrease in supply chain costs is needed to achieve a $23,000 profit?
- Calculate the new cost of supply chain purchases.
b) **Sales Strategy Improvement**
- What percentage increase in sales is necessary for a $23,000 profit?
- Determine the new sales amount to achieve this target profit.
**Instructions:**
- For part (a), provide the percentage decrease to one decimal place and the new supply chain cost as a whole number.
- For part (b), give the percentage increase to one decimal place and the new sales figure as a whole number.
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