Maybe someone more knowledgeable could shed some info on this but how exactly would that work? Does MS just stop producing X1s or they keep piling the boxes?
Do retail stores not care? Do they send stock back?
Individual retailers are experiencing excess XB1 inventory, which is why you're seeing all those very unseasonable bargain deals (eg - $50 target giftcard with xb1 purchase, etc) pop up over the past couple of weeks.
In regards to production/inventory costs when you outsource your manufacturing to a 3rd party (eg - Foxconn) at the scale MSFT requested (1 million+ units per month) they commit to a minimum order (in this case a 6 months minimum order is very likely). MSFT can't tell Foxconn to slow production because of slow sales because on Foxconn's end thousands of workers were hired, production lines were created, etc. Once the machine is fired up you can't exactly slow it down