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The Shamrock Corporation uses an injection molding machine to make a plastic product, Z39, after receiving firm orders from its customers. Below are the
The Shamrock 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. i (Click the icon to view the average manufacturing cycle times for Z39 and Y28.) Shamrock 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: (Click the icon to view the table.) Read the requirement. More Info Data Table - Shamrock 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. Shamrock 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 Shamrock 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. Selling Price per Order if Average Manufacturing Cycle Time per Order Is Product Annual Average Number of Orders Inventory Carrying Less than 975 Hours Z39 40 Y28 10 29,000 $ 8,400 More than 975 Hours 28,500 $ 7,900 Variable Cost Cost per Order per per Order Hour 15,950 $ ot enter a zero.) 0.80 5,040 0.20
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