Hau Lee Furniture, Inc., described in Example 1 of this chapter, finds its current profit of $ 10,000 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 $ 25,000 so he can obtain the bank’s approval for the loan.
a) 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?
b) What percentage improvement is needed in the sales strategy for profit to improve to $ 25,000? What must sales be for profit to improve to $ 25,000?