Hau Lee Furniture, Inc., spends 45% of its sales dollars in the supply chain and finds its current profit of $12,000

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 $17,000

so he can obtain the bank's approval for the loan.

	Current Situation
Sales	$80,000
Cost of material	$36,000(45%)
Production costs	$20,000(25%)
Fixed cost	$12,000(15%)
Profit	$12,000(15%)

a) What percentage improvement is needed in the supply chain strategy for profit to improve to $17,000?

What is the cost of material with a $17,000 profit?

A decrease of _____%

in material (supply-chain) costs is required to yield a profit of $17,000,

for a new material cost of $_____.

(Enter your response for the percentage decrease to one decimal place and enter your response for the new material cost as a whole number.)