Hau Lee Furniture, Inc., spends 45% of its sales dollars in the supply chain and finds its current profit of $15,000inadequate. 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 $20,000 so he can obtain the bank's approval for the loan.SalesCost of materialCurrent Situation$100,000$45,000 (45%)Production costsFixed costProfit$25,000 (25%)$15,000 (15%)$15,000 (15%)a) What percentage improvement is needed in the supply chain strategy for profit to improve to $20,000? What is thecost of material with a $20,000 profit?A decrease of ☐ % in material (supply-chain) costs is required to yield a profit of $20,000, for a new material cost of(Enter your response for the percentage decrease to one decimal place and enter your response for the newmaterial cost as a whole number.)

1. What percentage improvement is needed in the supply chain strategy for profit to improve to…

Answered: Hau Lee Furniture, Inc., spends 45% of…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

See similar textbooks

Similar questions

Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and finds its current profit of $28,000 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 $33,000 so he can obtain the bank's approval for the loan. Current Situation Sales $140,000 Cost of material $70,000 (50%) Production costs $28,000 (20%) Fixed cost $14,000 (10%) Profit $28,000 (20%) Part 2 a) What percentage improvement is needed in the supply chain strategy for profit to improve to $33,000? What…
Kamal Fatehl, production ma nager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown in the following statement)- inadequate for expanding his business. The bank isinsisting on an improved profit picture prior to approval of a loan for some new equipment. Kamal would like to improve the profit line to $25,000 so he can obtain the bank's approval for the loan. a) What percentage improvement is needed in a supply chain strategy for profit to improve to $25,000? What is the cost of material with a $25,000 profit?b) What percentage improvement is needed in a sales strategy for profit to improve to $25,000? What must sales be for profit to improve to $25,000?
As an operations management consultant, you have been asked to evaluate a furniture manufacturer’s cash to cash conversion cycle under the following assumptions: sales of $23.5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. What do you conclude? What recommendations can you make to improve performance? What would be the impact of reducing the accounts payable from $3,695,000to $2,000,000 and all other data remained the same? Please show in detail these impacts quantitatively in your answers.
One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The supplier has bid $0.10 per part, given a forecast you provided of 200,000 parts in year 1; 300,000 in year 2; and 500,000 in year 3. Shipping and handling of parts from the supplier’s factory is estimated at $0.01 per unit. Additional inventory handling charges should amount to $0.005 per unit. Finally, administrative costs are estimated at $20 per month. Although your plant is able to continue producing the part, the plant would need to invest in another molding machine, which would cost $10,000. Direct materials can be purchased for $0.05 per unit. Direct labor is estimated at $0.03 per unit plus a 50 percent surcharge for benefits; indirect labor is estimated at $0.011 per unit plus 50 percent benefits. Up-front engineering and design costs will amount to $30,000. Finally, management has insisted that overhead be allocated if the parts are made in-house…
Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $22,400 (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. Kamal would like to improve profit line to $32,400 so he can obtain the bank's approval for the loan. % of sales Sales 280,000 100% Cost of supply chain purchases 201,600 72% Other production costs 28,000 10% Fixed costs 28,000 10% Profit 22,400 8% Part 2 a) What percentage…
As an operations management consultant, you have been asked to evaluate a furniture manufacturer’s cash-to-cash conversion cycle under the following assumptions: sales of $23.5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on-hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. What do you conclude? What would be the impact of reducing the accounts payable from $3,695,000to $2,000,000 and all other data remained the same?
One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The supplier has bid $0.10 per part, given a forecast you provided of 400,000 parts in one year1. 500,000 in year 2; 700,000 in year 3. shipping and handling of parts from the supplier’s factory is estimated at $0.01 per unit. Additional inventory handling charges should amount to $0.006 per unit. Finally, administrative costs are estimated at $30 per month. Although your plant can continue producing the part, the plant would need to invest in another molding machine, which would cost $20,000. Direct materials can be purchased for $0.06 per unit. Direct labor is estimated at $0.05 per unit plus a 50% surcharge for benefits and, indirect labor is estimated at $0.008 per unit plus 50% benefit. Up-front engineering and design costs will amount to $40,000. Finally, management has insisted that overhead be allocated if the parts are made in-house at a rate of 100%…
As a Program Manager, you have been asked to evaluate a furniture manufacturer’s cash to cash conversion cycle under the following assumptions: sales of $23.5 million, cost of goods sold of 420.8 million, 50 operating weeks a year, total average on hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. What do you conclude? What recommendations can you make to improve performance? What would be the impact of reducing the accounts payable from $3,695,000to $2,000,000 and all other data remained the same? Please show in detail these impacts quantitatively in your answers.
Joel is the RM for the City Center Plaza hotel. He knows that under his franchise agreement, he pays an 8 percent franchise fee and 3 percent marketing fee on all revenue generated from room sales. Additional fees for using the hotel’s CRS are $2.00 per each room reserved. Internet service provider (IDS) related charges paid by the hotel for rooms sold through Internet sites including uberhothotels.com are $10.00 per room sold. Given this information, help Joel complete the revenue estimate worksheet presented below. Net ADR Yield Estimate Worksheet: City Center Plaza Distribution Channel Group rooms Third-party merchant Rooms sold 80 100 Standard rate $185 $160 Gross revenue Franchise fee (8%) Franchise marketing fee (3%) Franchisor's CRS fee ($2 per room) IDS fee Net total revenue Net ADR yield
Horizon BP in Antelope Park, Alaska, has noticed that utility bills are substantially higher when the average monthly temperature is colder. The only thing in the shop that uses natural gas is the furnace. Because of prevailing low temperatures, the furnace is used every month of the year (though less in the summer months and very little in August). Everything else in the shop runs on electricity, and electricity use is fairly constant throughout the year. For a year, Horizon has been recording the average daily temperature and the cost of its monthly utility bills for natural gas and electricity. Average Temperature Utility Cost January 31°F $ 774 February 41 643 March 43 557 April 44 424 May 46 289 June 50 247 July 53 234 August 60 224 September 50 319 October 40 544 November 30 764 December 10 919 Use the high-low method to estimate utility cost for the upcoming months of January and February. The forecast for January is a near record average…
A firm’s cost of goods sold last year was $3,410,000, and the firm operates 52 weeks per year. It carries seven items in inventory: three raw materials, two work-in-process items, and two finished goods. The following table contains last year’s average inventory level for each item, along with its value. a. What is the average aggregate inventory value? b. How many weeks of supply does the firm maintain? c. What was the inventory turnover last year?

SEE MORE QUESTIONS

Recommended textbooks for you

Marketing

ISBN:

9780357033791

Author:

Pride, William M

Publisher:

South Western Educational Publishing

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Purchasing and Supply Chain Management

Operations Management

ISBN:

9781285869681

Author:

Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:

Cengage Learning

Marketing

ISBN:

9780357033791

Author:

Pride, William M

Publisher:

South Western Educational Publishing

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Purchasing and Supply Chain Management

Operations Management

ISBN:

9781285869681

Author:

Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:

Cengage Learning

MARKETING 2018

Marketing

ISBN:

9780357033753

Author:

Pride

Publisher:

CENGAGE L

SEE MORE TEXTBOOKS