Finch Pet Supplies purchases its inventory from a variety of suppliers, some of which require a six-week lead time before delivering the goods. To ensure that she has a sufficient supply of goods on hand, Ms. Leblanc, the owner, must maintain a large supply of inventory. The cost of this inventory averages $20,400. She usually finances the purchase of inventory and pays a 10 percent annual finance charge. Ms. Leblancs accountant has suggested that she establish a relationship with a single large distributor who can satisfy all of her orders within a two-week time period. Given this quick turnaround time, she will be able to reduce her average inventory balance to $4,000. Ms. Leblanc also believes that she could save $3,300 per year by reducing phone bills, insurance, and warehouse rental space costs associated with ordering and maintaining the larger level of inventory.

Required: Based on the information provided, how much of Ms. Leblancs inventory holding cost could be eliminated by taking the accountants advice?

Eliminated Inventory Holding cost: