Question
Assume a manufacturer of residential lawn and garden equipment is considering investing in hardware and software that will improve linkages with suppliers. Management expects to
Assume a manufacturer of residential lawn and garden equipment is considering investing in hardware and software that will improve linkages with suppliers. Management expects to save 5 percent of sales by tightening up the supply chain in the first year, 3 percent in the second year, and 1 percent in the third year. The company's annual sales are $1 billion. The company's chief financial officer insists that the investment must pay for itself in cost savings in three years. To meet this requirement, how much should the chief information officer be allowed to spend on improving the supply chain? Explain your answer.
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