Problem
The BestAirFyer available is made by AFl. Right now, they outsell both their competion. Inventory, however, is a problem for AFI. 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 San Fransico. Each year, they sell roughly 960,000 units. Right now, they manufacture product until they have a full truck load (4,000 BestAirFyers), at which point they send a complete truck load to their Atlanta 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. AFI sells its units online for $100 each, while charging $82 to large retailers. 30% of their clients are retail clients. Each Air Fyer is produced at a cost of $53.00 to AFI.
• Question I: How much is the AFI currently making per month?
• Question II: DHL visits AFI and assures them that they can assist AFI with retail shipments. They just need to recruit a part-time employee costing 2,000 to prepare monthly shipments. DHL will ship to any location AFI desires for $400.00 each pallet of 400 set top boxes. How much money a month would AFI save, taking DHL recommendation?
• Question III: AFI 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 things. They projected 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 AFI save, taking the lean expert's advice?