What percentage of improvement in the Supply Chain Strategy is required for prof

Question

What percentage of improvement in the Supply Chain Strategy is required for profits to improve to $25,000 (in percentage)? (Hint: First find the needed cost of materials and the calculates the percentage improvement) -2.5 CURRENT SITUATION SUPPLY CHAIN STRATEGY $100,000 $55,000 $20,000 $10,000 $15,000 (60,000-50,000)/60,000) SUPPLY CHAIN STRATEGY 2 $100,000 60,000 $20,000 10,000 10,000 0% 100,000 Sales Cost of materials Production costs Fixed costs Profit % Improvement $20,000 10,000 $25,000 8.3%

Explanation / Answer

The cost of materials = Sales - Production cost - Fixed cost - Profit = 100000-20000-10000-25000 = 45,000

% Improvement = (60000-45000)/60000*100 = 25%

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