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Business
Operations Management
% OF SALES Sales $250,000 100% Cost of supply chain purchases 175,000 70% Other production costs 30,000 12% Fixed costs 30,000 12% Profit 15,000 6%

% OF SALES Sales $250,000 100% Cost of supply chain purchases 175,000 70% Other production costs 30,000 12% Fixed costs 30,000 12% Profit 15,000 6%

Practical Management Science
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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Kamal Fatehl, production ma nager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown in the following statement)- 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.                                                                                                                                                                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?
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?
% OF SALES Sales $250,000 100% Cost of supply chain purchases 175,000 70% Other production costs 30,000 12% Fixed costs 30,000 12% Profit 15,000 6%
Transcribed Image Text:% OF SALES Sales $250,000 100% Cost of supply chain purchases 175,000 70% Other production costs 30,000 12% Fixed costs 30,000 12% Profit 15,000 6%
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