Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and finds its current profit of $42,000 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 $47,000 so he can obtain the bank's approval for the loan.

	Current Situation
Sales	$140,000
Cost of material	$70,000 (50%)
Production costs	$21,000 (15%)
Fixed cost	$7,000 (5%)
Profit	$42,000 (30%)

a) What percentage improvement is needed in the supply chain strategy for profit to improve to $47,000? What is the cost of material with a $47,000 profit?

A decrease of XX% in material (supply-chain) costs is required to yield a profit of $47,000, for a new material cost of $XX. (Enter your response for the percentage decrease to one decimal place and enter your response for the new material cost as a whole number.)

b) What percentage improvement is needed in the sales strategy for profit to improve to $47,000? What must sales be for profit to improve to $47,000?

An increase of XX% in sales is required to yield a profit of $47,000, for a new new level of sales of $XX. (Enter your response for the percentage increase to one decimal place and enter your response for the new sales as a whole number.)