Case Analysis-The Executive Shirt Company (Group Project) Part A Calculations Current Process
Mike's Plan Ike's Plan Regular Shirts Regular & Custom Shirts Regular Shirts Custom Shirts A) Actual
Cycle Time (Min/shirt)2 minutes per cuff / 4 workers = 0.5120 minutes for cutting / 480 shirts worth
= 0.25 < labor content of cuffs at 0.5 CT All labor content / one less worker for each category while
cutting is still 0.25: Cuffs is still the bottleneck at 2 labor content / 3 workers = 0.67 mins/shirt 2.5 / 5
= 0.5 labor content for cutting. With everything divided by 1, collar is new bottleneck at 3.90 CT B)
Manufacturing Lead Time (days) (WIP * Cycle Time) / Minutes in a working day 11,760 * 0.5 / 480
minutes = 12.25 0.5 * 1980 / 480 = 2.06 days(9060 * 0.66) / 480 = 12.58 days(50 * 3.9) / 480 = 0.41
days C) WIP Inventory (shirts)Average WIP * Batch size 196 * 60 = 11,760396 * 5 = 1980 shirts 60 *
151 sum of avg. WIP = 9,060 shirts30 units at sewing + 5 units being cut + 15 units being finished =
50 WIP(given in case) D) Production Capacity (shirts/day)Minutes available / CT8 hours * 60 minutes
/ 0.5 = 960 shirts / day8 hours * 60 mins / 0.5 = 960 shirts/day480 / 0.666 = 720 shirts/day8 * 60 /
3.9 = 123 shirts/day
Current Process Mike's Plan Ike's Plan Regular Shirts Regular & Custom Shirts Regular Shirts Custom
Shirts E) Capacity Utilization Actual Produced / What could be produced 10,000 / (960 * 20 days) =
83%(16,000 + 2000) / (960 * 20) = 93.75% 16,000 / (720 * 20) = 111.11% 123 * 20 days = 2460
monthly production capacity 2000 / 2460 = 81.25% F) Direct Labor Content (min/shirt) Time spent
cutting + Direct labor for one shirt (90 + 30 minutes /8hr * 60 mins) + 3.9 + 2 + 0.65 + 2.5 + 1.7 + 0.66
+ 1.65 + 1.55 + 0.65 + 1.8 + 1.55 + 1.7 + 1.5 + 1.95 + 1.75 = 25.76(16,000 / 18,000) * 0.25 = 0.2777 +
(2,000 / 18,000 * 0.5) = 0.2777 = weighted avg. cutting time for regular and custom 25.76 - 0.25 =
25.51 sum of standard station time 25.51 + 0.2777 = 25.79 (120 minutes / 480 total minutes)+ 3.9 +
2 + 0.65 + 2.5 + 1.7 + 0.66 + 1.65 + 1.55 + 0.65 + 1.8 + 1.55 + 1.7 + 1.5 + 1.95 + 1.75 = 25.760.5 direct
labor for cutting + 3.9 + 2 + 0.65 + 2.5 + 1.7 + 0.66 + 1.65 + 1.55 + 0.65 + 1.8 + 1.55 + 1.7 + 1.5 + 1.95
+ 1.75 = 25.01 G) Direct Labor Utilization(Shirts per day * Direct labor content / (Direct labor *
minutes available) (800 shirts * 25.76 Direct labor content) / 64*480 = 67.08% (900 * 25.79) / (65
direct workers * 480 minutes available)= 23,211 / 31,200 = 74.39% (800 per day * 25.76) / (64 - 15) *
480) = 20,608 / 23,520 = 87.62% 100 * 26.01 / (16 * 480) = 33.87% H) Direct Labor Cost
($/shirt)Direct labor (Salary * hours worked) / shirts produced 64 (6 * 8) / 800 = $3.8465 ( $6 *
8hours) / 900 = 31200 / 900 = $3.47 720 shirts / day on normal salary: 49 * 6 * 8 = $2,352 80
remaining shirts * 0.67 = 53.6 minutes 53.6 / 60 * 9 = 8.04 16 ($6 * 8 hours) / 100 = 7.68
Current Process Mike's Plan Ike's Plan Regular Shirts Regular & Custom Shirts Regular Shirts Custom
Shirts 49 * 8.04 = 393.96 Total: (393.96 + 2352) / 800 = 3.43 Explanation 1. Regular shirt production
process without custom shirt fabrication. a. Cycle time for each station = total station time / # of
workers at station i. Cycle time for system = longest station cycle time ii. Cuffs station = System CT =
2.0 minutes / 4 workers = 0.5 minutes b. Manufacturing Lead Time (MLT) = Cycle Time (CT) * Works
in Progress (WIP) i. CT = 0.5 minutes ii. WIP individual shirts = (196 batches * 60 shirts / batch) =
11,760 iii. MLT in days = (0.5 * 11,760) / 480 minutes per day = 12.25 days c. Total individual shirts as
WIP = Sum of average batches * 60 shirts per batch i. WIP shirts = 196 batches * 60 shirts per batch =
11,760 shirts as WIP d. Production capacity of system at continuous 100% utilization (minutes) i.
Production capacity = minutes per day / CT of system ii. Production capacity = 480 / 0.5 = 960 units
per day@ continuous 100% utilization e. Production capacity utilization = monthly production /
monthly production capacity
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i. Current monthly production is 16,000 (given in case) ii. Total monthly capacity = 19,200 (920 per
day * 20 days per month) iii. Production utilization = 16,000 / 19,200 = 83% f. Direct Labor content =
sum of time at all stations + time per shirt for cutting i. Sum of time at all stations = 25.51 minutes
per shirt ii. A single cutting of 8 patterns on 60 layers of cloth produces (60 * 8) = 480 shirts iii. Total
cutting time = (1.5 minutes * 60 layers) + (30 minutes cutting) = 120 minutes iv. Cutting time per
shirt = 120 minutes / 480 shirts = 0.25 minutes per shirt v. Total labor content (time) per shirt =
25.51 + 0.25 = 25.76 minutes per shirt g. Direct Labor Utilization = Total used labor time / Total labor
time available i. Total labor time available = 64 workers * 480 minutes per day = 30,720 minutes ii.
Total time used = time per shirt * daily production (16,000 per month / 20 days) iii. Total time used =
25.76 minutes * 800 shirts per day = 20,608 minutes iv. Direct Labor Utilization = 20,608 minutes
used / 30,720 minutes available = 67.08% h. Total Direct Labor Cost per shirt = (# workers * 8 hours
per day * $6 per hour) / 800 i. Total Direct labor cost = (64 * 8 * 6) / 800 (total daily production =
16,000 / 20 days) ii. Total Direct Labor Cost = $3.84 / shirt 2. Mike’s plan for production of regular
and custom shirts using existing facilities with the addition of a new cutting machine and one
worker. a. System CT remains unchanged = 0.5 (the cuffs station still has the longest station CT) b.
Manufacturing Lead Time (MLT) = Cycle Time (CT) * Works in Progress (WIP) i. CT = 0.5 minutes ii.
WIP individual shirts = (396 batches * 5 shirts / batch) = 1,980