case analysis: executive shirt company, inc.docshare01.docshare.tips/files/6164/61643694.pdf ·...

Case Analysis: Executive Shirt Company, Inc.

Operations Management - I

PGP1 Section B

Group 4

Group Members

AMARENDRA SAHOO PGP2011533

BHAWNA GOKANI PGP2011595

CHATARKAR ANURAG MAHADE PGP2011600

C.LALRUATSANGA 2011FPM06

RUPSA CHAKRAVARTY PGP2011837

SAARANG K. MEHTA PGP2011841

UTKARSH SINGH PGP2011923

Case Analysis: Executive Shirt Company, Inc.

Summary:

Mr. Dwight Collier, Gen. Manager of Executive Shirt Company (ESC) is planning to introduce

customized shirts in his current production facility since they can fetch 75% more price as compared to

regular shirts. Currently, ESC is manufacturing 16,000 shirts per month and they plan to manufacture

2,000 customized shirts per month without hampering the current production.

The company has 5 departments, namely,

Cutting: 1 Machine, 4 Workers

Sewing: 48 Machines, 48 Workers

Inspection: 4 workers

Ironing: 4 Machines, 4 Workers

Packaging: 4 workers

Indirect Workers (material handlers) : 4 Workers

Mr. Collier introduced a change in the manufacturing process by introducing a Laser Cutting Machine

for customized shirt. He requested two of his managers, Mike and Ike to devise a production plan to

maximize the profit from both the products. The highlights of their plans are

Mike’s Plan: To go with one production line manufacturing both the products simultaneously

(other than the cutting process)

o Eight Batches of regular shirts with 5 shirts each

o One batch of 5 custom shirts

Ike’s Plan: To go for a separate production line for regular and customized shirt

o Eight Batches of regular shirts with 6o shirts each

o One batch of 5 custom shirts

Fig 1. Process Flow Diagram- Current

Production Process

Current Production Process

Time required for producing one unit from laying and cutting operation=120/60*8=0.25 min

Table 1.1. Current Production Plan

Operation Regular Shirt Labour Content

Number of workers

Time required for producing one unit (in min.)

Make Collar 3.90 8 .4875

Make Cuffs 2.00 4 .5

Make Sleeves 0.65 2 .325

Make Front 2.50 6 .41

Make Back 1.70 4 .42

Join Shoulder 0.66 2 .33

Attach collar 1.65 4 .41

Attach sleeves 1.55 4 .39

Stitch Down sleeves

0.65 2 .32

Sew Side seam 1.80 4 .45

Attach cuffs 1.55 4 .39

Hem Button 1.70 4 .42

Inspect 1.50 4 .38

Iron 1.95 4 .49

Fold Package 1.75 4 .42

From the table it is clear that cuff making is the slowest process and hence the cycle time of Regular Shirt making is

equal to the time of cuff making=0.5 min.

Table 1.2. Current Production Plan

Quantity Obtained Value

Actual Cycle Time

(min/shirt)

Bottle neck time Bottle Neck = 30 min

per batch

0.5 per shirt

Production Capacity

(shirts/day)


per batch

480/0.5 =960 units

WIP Inventory Total Inventory Cutting + Other

operations

10800+960 =11760

Manufacturing Lead

Time(days)

Input to Output WIP/production

Capacity

11760/960 =12.25

Capacity Utilisation Actual Production :

Production Capacity

800/960 83.33%

Direct Labour

Utilisation(min/shirt)

Direct Labour per unit Cutting + Other

operations

25.51+4(0.25)= 26.51

Direct Labour Cost

($/shirt)

Total labour cost per unit of

production

Labour cost =64 * 8 * 6 3072/800=$ 3.84/shirt

Direct Labour Utilisation Labour utilized/ Labour

Available

(800 *

26.51)/(8*60*64)

69.03%

Fig 2: Process Flow Diagram- Mike’s

Plan

Mike’s Production Plan

Time required for producing one unit from laying and cutting operation=120/60*8=0.25 min whereas the cycle time of

laser cutting machine is 2.5/5=0.5

Table 2.1. Mike’s Production Plan

Operation Regular Shirt Labour Content

Number of workers

Time required for producing one unit (in min.)









Stitch Down sleeves 0.65 2 .32




Inspect 1.50 4 .38

Iron 1.95 4 .49


From the table it is clear that cuff making is the slowest process and hence the cycle time of Mike’s Shirt making process

is equal to the time of cuff making=0.5 min.

Table 2.2. Mike’s Production Plan

Quantity Obtained Value(Regular and Custom Shirts)

Actual Cycle Time

(min/shirt)


per batch

0.5 per shirt

Production Capacity

(shirts/day)

Bottle neck time Bottle Neck =40 min

per batch

480/0.5=960 units


operations

1800+180 =1980

Manufacturing Lead

Time(days)


Capacity

1980/960=12.58


Production Capacity

900/960 93.75%

Direct Labour



operations

25.51+0.5=26.01

Direct Labour Cost

($/shirt)


production

Labour cost =65* 8 * 6 3120/900=3.47

Direct Labour Utilisation Labour utilised : Labour

Available

Labour Utilised = 900 *

26.01

75.02%

Fig 3: Process Flow Diagram- Ike’s Plan

Regular Shirt

Custom Shirt

Ike’s Production Plan

Table 3.1. Ike’s Production Plan

A. Regular Shirt Production

Operation Regular Shirt Labour Content Number of workers Time required/lbr/shrt (in min)









Stitch Down sleeves 0.65 1 .65




Inspect 1.50 3 .5

Iron 1.95 3 .65



B. Customized Shirt

Operation CUSTOM Shirt Labour Content Number of workers Time required/lbr/shrt (in min)

Make Collar 3.90 1 3.90

Make Cuffs 2.00 1 2.00

Make Sleeves 0.65 1 0.65

Make Front 2.50 1 2.50

Make Back 1.70 1 1.70

Join Shoulder 0.66 1 0.66

Attach collar 1.65 1 1.65

Attach sleeves 1.55 1 1.55

Stitch Down sleeves 0.65 1 0.65

Sew Side seam 1.80 1 1.80

Attach cuffs 1.55 1 1.55

Hem Button 1.70 1 1.70

Inspect 1.50 1 1.50

Iron 1.95 1 1.95

Fold Package 1.75 1 1.75


Quantity Obtained Value(Custom Shirts)

Actual Cycle Time

(min/shirt)

Bottle neck time Bottle Neck = 3.9 min

per shirt

3.9 per shirt

Production Capacity

(shirts/day)

Bottle neck time Bottle Neck =3.9 min

per shirt

480/3.9 =123 units


operations

45+5 =50

Manufacturing Lead

Time(days)


Capacity

50/123 =0.41


Production Capacity

100/123 81.3%

Direct Labour



operations

25.51+0.5 =26.01

Direct Labour Cost

($/shirt)


production

Labour cost =16* 8 * 6 768/100=7.68

Direct Labour Utilisation Labour utilised : Labour

Available

Labour Utilised = 100 *

26.01

33.86%

Table 4: Comparison of Mike’s and Ike’s Production Plan

Quantity Current Process

Regular Shirts

Mike’s plan

Regular & Custom shirts

Ike’s plan

Regular Shirts

Ike’s plan

Custom Shirts

Actual Cycle Time(min./ shirt) 0.5 0.5 0.67 3.9

Manufacturing Lead Time ( days)

12.25 2.06 12.58 0.41

WIP Inventory (shirts) 11760 1980 9060 50

Production capacity

( shirts/ day)

960 960 720 123

Capacity Utilization 83.33% 93.75% 111.11% 81.3%

Direct Labour content (min/shirt)

26.51 26.01 26.51 26.01

Direct Labour utilization 69.03% 75.02% 90.17% 33.8%

Direct labour Cost

( $/ shirt )

3.84 3.47 3.43 7.68

Table 5: Cost Comparison of Mike’s and Ike’s Plan

A. For Normal Shirts

Mikes plan Ikes plan

Raw materials $7.00 $7

Direct labor $3.46 $3.32

Indirect labor $.66 $.66

Other Indirect Cost $4.50 $4.50

Total manufacturing Cost $15.62 $15.48

Retail price $50 $50

Profit/shirt $34.38 $34.52

B. For Customized Shirt

Mikes plan Ikes plan

Raw materials $7.7 $7.7

Direct labor $3.46 $7.68

Indirect labor $.66 $.66

Other Indirect Cost $4.50 $4.50

Total manufacturing Cost $16.32 $20.54

Retail price $87.5 $87.5

Profit/shirt $71.18 $66.96

Conclusion: From Table 5: Cost Comparison of Mike’s and Ike’s Plan, we can see that the total profit

per shirt from Mike’s plan is greater $4.08. Thus, Mike’s plan is better.

case analysis: executive shirt company, inc.docshare01.docshare.tips/files/6164/61643694.pdf ·...

Documents