19-31 (25–30 min.) Waiting times, manufacturing cycle times. 1a. Average waiting time for an order of Z39

1b. = + = 160 hours + 80 hours = 240 hours per order 2a. Average waiting time for Z39 and Y28

2b.

= + = 330 hours + 80 hours = 410 hours = + = 330 hours + 20 hours = 350 hours 19-32 (60 min.) Waiting times, relevant revenues, and relevant costs
(continuation of 19-31). Selling price per order of Y28, which has an average manufacturing lead time of more than 320 hours $ 6,000 Variable cost per order 5,000 Additional contribution per order of Y28 $ 1,000 Multiply by expected number of orders × 25 Increase in expected contribution from Y28 $25,000 Expected loss in revenues and increase in costs from introducing Y28: Expected Loss in Expected Increase in Expected Loss in Revenues from Carrying Costs from Revenues Plus Increasing Average Increasing Average Expected Increases Manufacturing Cycle Manufacturing Cycle in Carrying Costs of Product Times for All Products Times for All Products Introducing Y28 (1) (2) (3) (4) = (2) + (3) Z39 $25,000.00a $6,375.00b $31,375.00 Y28 – 2,187.50c 2,187.50 Total $25,000.00 $8,562.50 $33,562.50 a 50 orders × ($27,000 – $26,500) b (410 hours – 240 hours) × $0.75 × 50 orders c (350 hours – 0) × $0.25 × 25 Increase in expected contribution from Y28 of $25,000 is less than increase in expected costs of $33,562.50 by $8,562.50. Therefore, Seawall should not introduce Y28. Alternative