A company is deciding where to assign its summer intern. The manager estimates that the intern can save $10,000 in the supply chain or increase sales (revenue) by $25,000
If sales (revenue) is divided into the three categories shown in the table, where should the manager assign the intern to maximize profits?
Supply Chain Costs Production Costs Profits
% of current sales (revenue) 35 25 40
The intern would save $10,000 in the supply chain, or show a profit of $10k. Profit from the increase in sales would be equal to revenue - costs. If revenue is X, then costs would be (.35+.25 )X. Thus profit would be X - .6X or simply .4X. $25,000(.4 ) = $10,000 so the manager is neutral on where to assign the intern.
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