A logistic team has developed new packaging for their best-selling product that reduces the packaging costs by 60% and the overall package size by 25%. The material can no longer be stacked on pallets and must be shipped and stored in non-stackable, returnable plastic bins.
Which of the following statements bests represents the potential trade-offs of implementing this change?
Changing the packaging to non-stackable bins will likely result in higher labor costs due to the handling of these bins. Since the bins cannot be stacked, there will be an increase in warehouse costs due to the inefficient use of space. Additionally, the change to non-stackable bins will likely increase transportation costs because fewer items can be transported in the same amount of space, requiring more trips or more vehicles to move the same quantity of product.
B. Higher labor costs, increase in warehouse costs, and an increase in transportation costs.
Improved customer service, increase in warehouse storage costs, and a DECREASE in transportation costs