The hottest set top box available is made by Set Top Box International. Right now, they outsell both BestBuy and Target in terms of sales. Inventory, however, is a problem for Set Top Box International. Given the brief lifespan of their product. when a new product is introduced, companies frequently write off a sizable amount of their inventory. They currently operate a completely automated facility Allstate Rd, Boston. Each year, they sell roughly 960,000 units. Right now, they manufacture product until they have a full truck load (4,000 set tops), at which point they send a complete truck load to their Illinois distribution center for $600.00. Following that, the distribution center mails out individual units to online clients for a shipping and handling fee of $22.00. Retailers receive LTL truck shipments from the distribution facility. 400 of each are shipped out at a time. For these shipments, the distribution center charges $400.00. The distribution center also has a fixed monthly fee of $5,000 dollars. Set Top Box International sells its units online for $100 each, while charging $82 to large retailers like Wal-Mart. 30% of their clientele are retail clients. Each Set Top is produced at a cost of $53.00 to Set Top Box International.

Build on the information from questions 1 and 2: INF Box International has decided to go ultra-lean, and in order to do so, it will insource all single order online shipping. This effectively eliminates superfluous inventory in the system. They cleared some floor space and hired employees to package, label, and ship the set top boxes. INF projects that shipping and handling would be $27 per set top. This lean method would put an end to all excess inventory. How much money a month would INF Box save, taking the lean experts advice.

$6,400

It would cost more money and would decrease profits

$11,400

Neutral no loss but also no gain

$5,000

$266,600