Can inventory costs reduce profits from cheaper production costs?

SUMMARY:

We were provided 50 years of Lego set data. Our goal was to explore the history and evolution of Lego sets. An open ended question. In this report, a business approach was taken instead of an educational or informative perspective designed only to display the history of this company.

Questions:

1. How did the cost to produce a single piece from a set evolve overtime?

2. How did the reduction in production costs affect decisions made by the Lego company?

3. Are there any side effects to their decisions over the years?

4. Are there any signs that the company has been trying to reduce these side effects?

Findings:

With so many different categories, theme groups and themes, a decision had to be made on how to calculate a representative price per piece? This answer became clear after charting the number of sets by their categories. The "Normal" category was essentially the only one that had sets during the years of 1991 and 2000. From the chart below, it can be seen that other categories increased after the year 2000.

Using the "Normal" category, the total sum of prices and piece count were calculated. An average was produced by dividing the sum of prices by the sum of pieces. In seeing the price/piece bottomed out around $0.10 in the year of 2000, when other categories started appearing, an average price per piece was calculated for the years between 2000 and 2022. This average was displayed in the subtitle to give the user easy access to the bottomed out price per piece.

After viewing the above chart, it could be seen that the number of sets produced each year increased, which raised the question of keeping inventory in a warehouse. Therefore, the chart below was produced to answer questions 1 through 3.

The number of theme groups and themes was explored to see any trends that might indicate what kind of decisions were being made to reduce inventory and production costs to give more insight to question 2. Here a decision had to be made between bringing attention to years 1991 or 2003. It was decided to emphasize year 2003 so the user would not miss the decline of groups from this year on. The year 1991 clearly showed the expansion of themes when data for the price of sets became available in the dataset.

The table and its tooltip was added to allow the user to dive deeper into how decisions were being made to keep inventory costs down.

Here is link to the working model: Lego History Report