Hau Lee$$ Furniture, Inc., spends $45\%$ of its sales dollars in the supply chain and finds its current profit of $$$$35000$ inadequate. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Hau would like to improve the profit line to $$$$40000$ so he can obtain the$$ bank's approval for the loan.

Current Situation

Sales

$$$$140000$

Cost of material

$$$$63000(45\%)$

Production costs

$$$$35000(25\%)$

Fixed cost

$$$$7000(5\%)$

Profit

$$$$35000(25\%)$

Part $2$

$$a$)$ What percentage improvement is needed in the supply chain strategy for profit to improve to $$$$40000?$ What is the cost of material with a $$$$40000$profit$?$

A decrease of

$$

$\_\_\_\_\%$ in material$($supply$-$chain$)$ costs is required to yield a profit of $$$$40000,$ for a new material cost of $$$$\_\_\_\_\_$

$$