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Executive-Shirt-Company-Inc case study
Business Management (Institute of Business Management)
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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
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Fig 1. Process Flow Diagram- Current
Production Process
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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
Sew Side seam
0.65
2
.32
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.
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Table 1.2. Current Production Plan
Quantity
Actual Cycle Time
Obtained Value
Bottle neck time
Bottle Neck = 30 min
per batch
0.5 per shirt
Bottle neck time
Bottle Neck = 30 min
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
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%
(min/shirt)
Production Capacity
(shirts/day)
($/shirt)
Direct Labour Utilisation
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Fig 2: Process Flow Diagram- Mike’s
Plan
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Mike’s Production Plan
Time required for producing one unit from laying and cutting operation=120/60*8=0.25 min whereas the cycle time of
laser cutting machine is 2.5/5=0.5
Table 2.1. Mike’s Production Plan
Operation
Regular Shirt Labour
Content
Number of
workers
Time required for producing
one unit (in min.)
Make Collar
3.90
8
.4875
Make Cuffs
2.00
4
.5
Make Sleeves
0.65
2
.325
Make Front
2.50
6
.41
Make Back
1.70
4
.42
Join Shoulder
0.66
2
.33
Attach collar
1.65
4
.41
Attach sleeves
1.55
4
.39
Stitch Down sleeves
0.65
2
.32
Sew Side seam
1.80
4
.45
Attach cuffs
1.55
4
.39
Hem Button
1.70
4
.42
Inspect
1.50
4
.38
Iron
1.95
4
.49
Fold Package
1.75
4
.42
From the table it is clear that cuff making is the slowest process and hence the cycle time of Mike’s Shirt making process
is equal to the time of cuff making=0.5 min.
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Table 2.2. Mike’s Production Plan
Quantity
Actual Cycle Time
Obtained Value(Regular and Custom Shirts)
Bottle neck time
Bottle Neck = 30 min
per batch
0.5 per shirt
Bottle neck time
Bottle Neck =40 min
per batch
480/0.5=960 units
WIP Inventory
Total Inventory
Cutting + Other
operations
1800+180 =1980
Manufacturing Lead
Time(days)
Input to Output
WIP/production
Capacity
1980/960=12.58
Capacity Utilisation
Actual Production :
Production Capacity
900/960
93.75%
Direct Labour
Utilisation(min/shirt)
Direct Labour per unit
Cutting + Other
operations
25.51+0.5=26.01
Direct Labour Cost
Total labour cost per unit of
production
Labour cost =65* 8 * 6
3120/900=3.47
Labour utilised : Labour
Available
Labour Utilised = 900 *
26.01
75.02%
(min/shirt)
Production Capacity
(shirts/day)
($/shirt)
Direct Labour Utilisation
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Fig 3: Process Flow Diagram- Ike’s Plan
Regular Shirt
Custom Shirt
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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)
Make Collar
3.90
7
.56
Make Cuffs
2.00
3
.67
Make Sleeves
0.65
1
.65
Make Front
2.50
5
.5
Make Back
1.70
3
.57
Join Shoulder
0.66
1
.66
Attach collar
1.65
3
.55
Attach sleeves
1.55
3
.52
Stitch Down sleeves
0.65
1
.65
Sew Side seam
1.80
3
.6
Attach cuffs
1.55
3
.52
Hem Button
1.70
3
.57
Inspect
1.50
3
.5
Iron
1.95
3
.65
Fold Package
1.75
3
.59
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Table 3.2. Ike’s Production Plan
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
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Table 3.3. Ike’s Production Plan
Quantity
Actual Cycle Time
Obtained Value(Custom Shirts)
Bottle neck time
Bottle Neck = 3.9 min
per shirt
3.9 per shirt
Bottle neck time
Bottle Neck =3.9 min
per shirt
480/3.9 =123 units
WIP Inventory
Total Inventory
Cutting + Other
operations
45+5 =50
Manufacturing Lead
Time(days)
Input to Output
WIP/production
Capacity
50/123 =0.41
Capacity Utilisation
Actual Production :
Production Capacity
100/123
81.3%
Direct Labour
Utilisation(min/shirt)
Direct Labour per unit
Cutting + Other
operations
25.51+0.5 =26.01
Direct Labour Cost
Total labour cost per unit of
production
Labour cost =16* 8 * 6
768/100=7.68
Labour utilised : Labour
Available
Labour Utilised = 100 *
26.01
33.86%
(min/shirt)
Production Capacity
(shirts/day)
($/shirt)
Direct Labour Utilisation
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Table 4: Comparison of Mike’s and Ike’s Production Plan
Current Process
Mike’s plan
Ike’s plan
Ike’s plan
Regular Shirts
Regular &
Custom shirts
Regular Shirts
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
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
3.84
3.47
3.43
7.68
Quantity
( shirts/ day)
( $/ shirt )
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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
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
B. For Customized Shirt
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.
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