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Hoffman has also conceded that part of the savings would be offset by about $115k in additional storage and handling costs. Another important factor in Hoffman's case is that Toy World will approach full capacity during 1994's peak season production. Due to recent expansions Toy World has a strained working capital position and would most likely have trouble affording another expansion in the near future. McClintock knows that Hoffman may be onto something but there is more to this decision than meets the eyes.
With a first look at the financials and Hoffman's case to move to level production schedules it seems to be a no-brainer for Toy World...
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