Executive Shirt Company Inc

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 3.90 2.00 0.65 2.50 1.70 0.66 1.65 1.55 0.65 1.80 1.55 1.70 1.50 1.95 1.75
Number of workers 8 4 2 6 4 2 4 4 2 4 4 4 4 4 4
Time required for producing one unit (in min.) .4875 .5 .325 .41 .42 .33 .41 .39 .32 .45 .39 .42 .38 .49 .42
Make Collar Make Cuffs Make Sleeves Make Front Make Back Join Shoulder Attach collar Attach sleeves Stitch Down sleeves Sew Side seam Attach cuffs Hem Button Inspect Iron Fold Package
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 Actual Cycle Time (min/shirt) Production Capacity (shirts/day) WIP Inventory Total Inventory Bottle neck time Bottle neck time Obtained Value Bottle Neck = 30 min per batch 0.5 per shirt
Bottle Neck = 30 min per batch
480/0.5 =960 units
Cutting + Other operations WIP/production Capacity 800/960
10800+960 =11760
Manufacturing Lead Time(days) Capacity Utilisation
Input to Output
11760/960 =12.25
Actual Production : Production Capacity
83.33%
Direct Labour Utilisation(min/shirt)
Direct Labour per unit
Cutting + Other operations
25.51+4(0.25)= 26.51
Direct Labour Cost ($/shirt) Direct Labour Utilisation
Total labour cost per unit of production
Labour cost =64 * 8 * 6
3072/800=$ 3.84/shirt
Labour utilized/ Labour Available
(800 * 26.51)/(8*60*64)
69.03%
Fig 2: Process Flow Diagram- Mikes Plan
Mikes 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. Mikes Production Plan
Operation
Regular Shirt Labour Content 3.90 2.00 0.65 2.50 1.70 0.66 1.65 1.55 0.65 1.80 1.55 1.70 1.50 1.95 1.75
Number of workers 8 4 2 6 4 2 4 4 2 4 4 4 4 4 4
Time required for producing one unit (in min.) .4875 .5 .325 .41 .42 .33 .41 .39 .32 .45 .39 .42 .38 .49 .42
Make Collar Make Cuffs Make Sleeves Make Front Make Back Join Shoulder Attach collar Attach sleeves Stitch Down sleeves Sew Side seam Attach cuffs Hem Button Inspect Iron Fold Package
From the table it is clear that cuff making is the slowest process and hence the cycle time of Mikes Shirt making process is equal to the time of cuff making=0.5 min.
Table 2.2. Mikes Production Plan
Quantity
Actual Cycle Time (min/shirt) Production Capacity (shirts/day) WIP Inventory Total Inventory Bottle neck time Bottle neck time
Obtained Value(Regular and Custom Shirts)

Bottle Neck = 30 min per batch 0.5 per shirt
Bottle Neck =40 min per batch
480/0.5=960 units
1800+180 =1980
Input to Output
1980/960=12.58
93.75%
25.51+0.5=26.01
Labour cost =65* 8 * 6
3120/900=3.47
Labour utilised : Labour Available
Labour Utilised = 900 * 26.01
75.02%
Fig 3: Process Flow Diagram- Ikes Plan
Regular Shirt
Custom Shirt
Ikes Production Plan

Table 3.1. Ikes Production Plan
A. Regular Shirt Production

Operation Make Collar Make Cuffs Make Sleeves Make Front Make Back Join Shoulder Attach collar Attach sleeves Stitch Down sleeves Sew Side seam Attach cuffs Hem Button Inspect Iron Fold Package Regular Shirt Labour Content 3.90 2.00 0.65 2.50 1.70 0.66 1.65 1.55 0.65 1.80 1.55 1.70 1.50 1.95 1.75 Number of workers 7 3 1 5 3 1 3 3 1 3 3 3 3 3 3 Time required/lbr/shrt (in min) .56 .67 .65 .5 .57 .66 .55 .52 .65 .6 .52 .57 .5 .65 .59
Table 3.2. Ikes Production Plan
B. Customized Shirt
Operation Make Collar Make Cuffs Make Sleeves Make Front Make Back Join Shoulder Attach collar Attach sleeves Stitch Down sleeves Sew Side seam Attach cuffs Hem Button Inspect Iron Fold Package CUSTOM Shirt Labour Content 3.90 2.00 0.65 2.50 1.70 0.66 1.65 1.55 0.65 1.80 1.55 1.70 1.50 1.95 1.75 Number of workers 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Time required/lbr/shrt (in min) 3.90 2.00 0.65 2.50 1.70 0.66 1.65 1.55 0.65 1.80 1.55 1.70 1.50 1.95 1.75
Table 3.3. Ikes Production Plan Quantity Actual Cycle Time (min/shirt) Production Capacity (shirts/day) WIP Inventory Total Inventory Bottle neck time Bottle neck time Obtained Value(Custom Shirts) Bottle Neck = 3.9 min per shirt 3.9 per shirt
Bottle Neck =3.9 min per shirt
480/3.9 =123 units
45+5 =50
Input to Output
50/123 =0.41
81.3%
25.51+0.5 =26.01
Labour cost =16* 8 * 6
768/100=7.68
Labour utilised : Labour Available
Labour Utilised = 100 * 26.01
33.86%
Table 4: Comparison of Mikes and Ikes Production Plan

Quantity Current Process Regular Shirts Actual Cycle Time(min./ shirt) 0.5 Mikes plan Regular & Custom shirts 0.5 Ikes plan Regular Shirts 0.67 Ikes plan Custom Shirts 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) Capacity Utilization
960
960
720
123
83.33%
93.75%
111.11%
81.3%
Direct Labour content (min/shirt) Direct Labour utilization
26.51
26.01
26.51
26.01
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 Mikes and Ikes Plan A. For Normal Shirts Mikes plan Raw materials Direct labor Indirect labor Other Indirect Cost Total manufacturing Cost Retail price Profit Profit for 100 shirts $7.7 $3.46 $.66 $4.50 $16.32 $87.5 $71.18 $34622 Ikes plan $7.7 $7.68 $.66 $4.50 $20.54 $87.5 $66.96 $34312
B. For Customized Shirt Mikes plan Raw materials Direct labor Indirect labor Other Indirect Cost Total manufacturing Cost Retail price Profit Profit for 100 shirts $7.7 $3.46 $.66 $4.50 $16.32 $87.5 $71.18 $34622 Ikes plan $7.7 $7.68 $.66 $4.50 $20.54 $87.5 $66.96 $34312

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Fig 1.

Process Flow Diagram- Current Production Process

Current Production Process

Bottle Neck = 30 min per batch

480/0.5 =960 units

Cutting + Other operations WIP/production Capacity 800/960

Manufacturing Lead Time(days) Capacity Utilisation

Actual Production : Production Capacity

Direct Labour Utilisation(min/shirt)

Direct Labour per unit

Cutting + Other operations

Direct Labour Cost ($/shirt) Direct Labour Utilisation

Total labour cost per unit of production

Labour cost =64 * 8 * 6

Labour utilized/ Labour Available

Fig 2: Process Flow Diagram- Mikes Plan

Mikes Production Plan

Table 2.2. Mikes Production Plan

Obtained Value(Regular and Custom Shirts)

Bottle Neck =40 min per batch

Cutting + Other operations WIP/production Capacity 900/960

Manufacturing Lead Time(days) Capacity Utilisation

Actual Production : Production Capacity

Direct Labour Utilisation(min/shirt)

Direct Labour per unit

Cutting + Other operations

Direct Labour Cost ($/shirt) Direct Labour Utilisation

Total labour cost per unit of production

Labour cost =65* 8 * 6

Labour utilised : Labour Available

Labour Utilised = 900 * 26.01

Fig 3: Process Flow Diagram- Ikes Plan

Ikes Production Plan

A. Regular Shirt Production

Table 3.2. Ikes Production Plan

Bottle Neck =3.9 min per shirt

480/3.9 =123 units

Cutting + Other operations WIP/production Capacity 100/123

Manufacturing Lead Time(days) Capacity Utilisation

Actual Production : Production Capacity

Direct Labour Utilisation(min/shirt)

Direct Labour per unit

Cutting + Other operations

Direct Labour Cost ($/shirt) Direct Labour Utilisation

Total labour cost per unit of production

Labour cost =16* 8 * 6

Labour utilised : Labour Available

Labour Utilised = 100 * 26.01

Table 4: Comparison of Mikes and Ikes Production Plan

Manufacturing Lead Time ( days)

WIP Inventory (shirts)

Production capacity ( shirts/ day) Capacity Utilization

Direct Labour content (min/shirt) Direct Labour utilization

Direct labour Cost ( $/ shirt )

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