The Seawall Corporation uses an injection molding machine to make a plastic product, Z39, after receiving firm orders from its customers. Below are the average waiting time and manufacturing cycle time per order for each product.

Seawall estimates that it will receive 40 orders for Z39 during the coming year. Each order of Z39 will take 70 hours of machine time. The annual machine capacity is 3,000 hours. Seawall is considering introducing a new product, Y28. The company expects it will receive 10 orders of Y28 in the coming year. Each order of Y28 will take 10 hours of machine time. Assuming the demand for Z39 will not be affected by the introduction of Y28, the average waiting time for an order received is 985 hours. The average manufacturing cycle time per order for Z39 if Seawall introduces Y28 is 1,055 hours, and the average manufacturing cycle time per order for Y28 is 995 hours. The average amount of time that an order for Z39 will wait in line before it is processed is 490 hours. The average manufacturing cycle time per order for Z39 without introducing Y28 is 560.

Seawall is still debating whether it should introduce Y28. The following table provides information on selling prices, variable costs, and inventory carrying costs for Z39 and Y28:

Data table:

Requirement

Using the average manufacturing cycle times calculated, should Seawall manufacture and sell Y28? Show your calculations and briefly explain your reasoning.

Selling Price per Order if Average Manufacturing Cycle Time per Order Is Annual Average Number of Orders Less than 975 Hours More than 975 Hours Inventory Carrying Variable Cost Cost per Order per Hour Product per Order Z39 40 $ 29,000 $ 28,500 $ 15,950 $ 0.70 Y28 10 9,100 8,600 5,460 0.20