Post on 01-Jul-2018
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)
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
($/shirt)
Total labour cost per unit of
production
Labour cost =64 * 8 * 6 3072/800=$ 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.)
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.
Table 2.2. Mike’s Production Plan
Quantity Obtained Value(Regular and Custom Shirts)
Actual Cycle Time
(min/shirt)
Bottle neck time Bottle Neck = 30 min
per batch
0.5 per shirt
Production Capacity
(shirts/day)
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
($/shirt)
Total labour cost per unit of
production
Labour cost =65* 8 * 6 3120/900=3.47
Direct Labour Utilisation Labour utilised : Labour
Available
Labour Utilised = 900 *
26.01
75.02%
Fig 3: Process Flow Diagram- Ike’s Plan
Regular Shirt
Custom Shirt
Ike’s Production Plan
Table 3.1. Ike’s Production Plan
A. Regular Shirt Production
Operation Regular Shirt Labour Content Number of workers Time required/lbr/shrt (in min)
Make Collar 3.90 7 .56
Make Cuffs 2.00 3 .67
Make Sleeves 0.65 1 .65
Make Front 2.50 5 .5
Make Back 1.70 3 .57
Join Shoulder 0.66 1 .66
Attach collar 1.65 3 .55
Attach sleeves 1.55 3 .52
Stitch Down sleeves 0.65 1 .65
Sew Side seam 1.80 3 .6
Attach cuffs 1.55 3 .52
Hem Button 1.70 3 .57
Inspect 1.50 3 .5
Iron 1.95 3 .65
Fold Package 1.75 3 .59
Table 3.2. Ike’s Production Plan
B. Customized Shirt
Operation CUSTOM Shirt Labour Content Number of workers Time required/lbr/shrt (in min)
Make Collar 3.90 1 3.90
Make Cuffs 2.00 1 2.00
Make Sleeves 0.65 1 0.65
Make Front 2.50 1 2.50
Make Back 1.70 1 1.70
Join Shoulder 0.66 1 0.66
Attach collar 1.65 1 1.65
Attach sleeves 1.55 1 1.55
Stitch Down sleeves 0.65 1 0.65
Sew Side seam 1.80 1 1.80
Attach cuffs 1.55 1 1.55
Hem Button 1.70 1 1.70
Inspect 1.50 1 1.50
Iron 1.95 1 1.95
Fold Package 1.75 1 1.75
Table 3.3. Ike’s Production Plan
Quantity Obtained Value(Custom Shirts)
Actual Cycle Time
(min/shirt)
Bottle neck time Bottle Neck = 3.9 min
per shirt
3.9 per shirt
Production Capacity
(shirts/day)
Bottle neck time Bottle Neck =3.9 min
per shirt
480/3.9 =123 units
WIP Inventory Total Inventory Cutting + Other
operations
45+5 =50
Manufacturing Lead
Time(days)
Input to Output WIP/production
Capacity
50/123 =0.41
Capacity Utilisation Actual Production :
Production Capacity
100/123 81.3%
Direct Labour
Utilisation(min/shirt)
Direct Labour per unit Cutting + Other
operations
25.51+0.5 =26.01
Direct Labour Cost
($/shirt)
Total labour cost per unit of
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.