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 ne

To determine how much Set Top Box International (INF International) would save by using UPS's recommendation to ship directly from their factory to retail partners, we need to compare the current distribution costs with the proposed UPS distribution costs. ### Current Distribution Costs: 1. **Monthly Unit Sales:** - Total units sold annually: 960,000 units - Monthly units sold: 960,000 / 12 = 80,000 units 2. **Retail Clients:** - 30% are retail clients: 80,000 * 0.30 = 24,000 units to retail clients per month. - Units per shipment to retailers: 400 units - Monthly shipments to retailers: 24,000 / 400 = 60 shipments 3. **Shipping Cost to Retailers from Distribution Center:** - Cost per shipment to retailers: $400 - Total monthly shipping cost to retailers: 60 shipments * $400 = $24,000 4. **Fixed Monthly Fee for Distribution Center:** - Monthly fixed fee: $5,000 5. **Total Monthly Distribution Costs (Current):** - Total = Shipping cost to retailers + Fixed fee - Total = $24,000 + $5,000 = $29,000 ### Proposed Distribution Costs with UPS: 1. **Monthly Shipments:** - UPS ships directly to retail partners from the factory, thus removing the need for the distribution center. - Cost per pallet (400 units): $400 2. **Monthly Shipments to Retailers:** - Units to retail clients per month: 24,000 - Monthly shipments (same as before): 24,000 / 400 = 60 shipments 3. **Total Shipping Costs with UPS:** - Cost for UPS shipments: 60 shipments * $400 = $24,000 4. **Part-Time Employee Cost:** - Monthly cost for part-time employee: $2,000 5. **Total Monthly Distribution Costs (With UPS):** - Total = Shipping cost with UPS + Employee costs - Total = $24,000 + $2,000 = $26,000 ### Monthly Cost Savings: 1. **Current total costs:** - $29,000 2. **Proposed total costs with UPS:** - $26,000 3. **Savings:** - Savings = Current total costs - Proposed total costs - Savings = $29,000 - $26,000 = **$3,000** Based on this analysis, INF Box International would save **$3,000** a month by taking UPS's recommendation to ship directly to retail partners. However, this doesn't exactly match the options provided in the question. Given the options: - Neutral – no loss but also no gains - They would be worse off. It would add cost. - $3,400 - $2,000 - $6,600 - $1,600 The answer closest to our calculation of $3,000 savings isn't available in the options. However, as outlined, they would indeed save money with the UPS recommendation. Please confirm if there are any additional details or if the provided figures need any adjustments.