Easy Riders Ltd. makes small motorcycles. The monthly demand for these motorcycle ranges from 80 to 100 motorcycles. The average demands is 92 motorcycles. The plant operates 300 hours a month. Each cycle takes approximately 1.5 hours to complete.

if the company adds a new line of scooters, initial demand will be 20 per month. Each scooter will take 1 hours to make. To offset approaching production capacity, expanding the assembly line is possible. This will decrease manufacturing time for all products by 20 percent. However, this will increase the costs of motorcycles from $400 to $500 and a scooters from $200 to $240. The change will also cause increase in price from $700 to $750 for motorcycle and from $450 to $500 for scooters.

Calculate

a) what is the average waiting time for motorcycles if they are the only item manufactured.

b) what is the average waiting time if both motorcycle and scooters are produced and the assembly line is not enlarged.

c) What is the average waiting time if both motorcycle and scooters are produced and the assembly line is enlarged.

d) what is the expected monthly margin without scooters if the company sells all 92 motorcycle its manufactures.

e) What are the expected monthly contribution margins if scooters are made with the current assembly line and with new assembly line? Assume average sales and that sales equal production.

f) What action do you recommend.