Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 16

A company is able to implement one of two strategies regarding a particular product: hire a marketing firm to increase sales 20 percent or assign a product procurement manager who can reduce material cost for the product by 6 percent. Currently, the product has sales of $10,000,000. The costs of materials are $7,500,000, labor costs are $1,500,000, and overhead costs are $500,000. What are the effects on net income of the two alternative strategies?