Kitty Wonderland (KW) makes toys for cats and kittens. KW’s managers have recently learned that they can calculate the average waiting time for an order from the time an order is received and the time it is manufactured. They have asked for your help and have provided the following information.

Expected number of orders for the product: 2,000

Manufacturing time per order: 4 hours

Annual machine capacity in hours: 10,000

Required

1. Calculate the average waiting time per order.

2. After learning about the average waiting time, KW’s managers are confused. They do not understand why, if annual machine capacity is greater than the average number of orders for the product, there would be any waiting time at all. Write a memo to clarify the situation.

3. The managers have asked for your suggestions on what they can do to minimize or eliminate waiting time. How would you respond?

4. Management is expecting sales to increase. Will average waiting time increase or decrease? Explain briefly.