Improvement is needed in the supply chain strategy

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Reference no: EM132254013

Ian van den Broëck, production manager of Quadrant Manufacturing International, finds his profit at $27,000 (as shown in the statement below) inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Accordingly, Ian would like to improve the profit line to $42,000 so he can obtain the bank’s approval for the loan.

Sales $450,000 100% (percentage of sale)

Cost of supply chain purchases $315,000 70% (percentage of sale)

Other production costs $54,000 12% (percentage of sale)

Fixed costs $54,000 12% (percentage of sale)

Profit $27,000 6% (percentage of sale)

(a) What percentage improvement is needed in the supply chain strategy for profit to improve to $42,000? What is the cost of material with a $42,000 profit?

(b) What percentage improvement is needed in the sales strategy for profit to improve to $42,000? What must sales be for profit to improve to $42,000?

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Reference no: EM132254013

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