Final answer:
To maximize profits, the manager should assign the intern to increase sales, yielding a higher net increase in profit compared to savings in the supply chain.
Step-by-step explanation:
The student's question involves determining where to assign an intern to maximize profits for a company. The choice is between saving $10,000 in the supply chain or increasing sales by $20,000. When calculating profits, which is total revenues minus total costs, one must consider the proportional costs that come with increased sales. According to the table, current costs are 35% of sales for both the supply chain and production, and profits are 30% of sales. Therefore, if we increase sales by $20,000, additional costs would be 35% of $20,000, which equals $7,000. So the net increase to profit would be $20,000 - $7,000 = $13,000. On the other hand, if the intern saves $10,000 in the supply chain, it directly adds to the profits because there are no additional costs associated with this saving. Thus, assigning the intern to the supply chain results in a lower increase to profit ($10,000) compared to increasing sales ($13,000).
Consequently, to maximize profits, the manager should assign the intern to a role where they can help increase sales.