Company does not charge its customers for shipping

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Reference no: EM131731819

A manufacturing company doesn't charge its customers for shipping. It's products are small and lightweight, so there isn't much difference between the cost to ship small orders and large orders. Shipment costs average $84 per.

The company has a challenge to reduce its costs. One idea they are considering is charging customers for small orders. They did a survey asking customers what they would do if the company imposed a $90 fee on orders <$500. Of the 172 customers surveyed, 51 indicated they would pay the fee. The others said they would consolidate their orders.

If the customers who want to avoid the fee consolidate their orders and their orders are reduced by 33%, what cost savings will the company realize from this change in behavior?

Last quarter, company processed 65,104 shipments.

Give the answer in $ (not percentage).

Reference no: EM131731819

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