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CASE STUDY : EXECUTIVE SHIRT

COMPANY
PRESENTED BY :
ROHAN THOMAS JOHN PGP07140
Overview:
Executive Shirt Company has a solid reputation in the apparel company
ESC sales were dipping
Dwight Collier, general manager, wanted to foray into the custom made shirt segment
Customers were willing to pay 75 % more for a custom made shirt
Although they were deterred by high prices and long delivery times
ESC wanted to get into this market with reduced prices and delivery times

Current ESC production facilty:


ESC is manufacturing 16,000 shirts per month
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
Batch consists of 60 shirts
ESC plans for custom shirts:
Purchase a new cutting machine
This machine takes only 2.5 minutes for the process
Batch size handled is only 5 shirts

Current production Process:

Regular
Shirts
Number of minutes/per
Labour(m
workers shirt/worker
inutes
Operation per shirt)
Make collar 3.9 8 0.49
Make cuffs 2 4 0.50

Make sleeves 0.65 2 0.33

Make front 2.5 6 0.42


Make back 1.7 4 0.43
Join shoulders 0.66 2 0.33
Attach collar 1.65 4 0.41
Attach sleeves 1.55 4 0.39
Stitch down sleeves 0.65 2 0.33
Sew side seam 1.8 4 0.45
Attach cuffs 1.55 4 0.39
Hem bottom 1.7 4 0.43
Inspect 1.5 4 0.38
Iron 1.95 4 0.49
Fold, Package 1.75 4 0.44

Quantity Obtained Value

Bottle Neck = 30 min per


Actual Cycle Time (min/shirt) 0.5
batch
WIP Inventory Cutting + Other operations 11760
Manufacturing Lead Time(days) WIP/production Capacity 12.25
Bottle Neck = 30 min per
Production Capacity (shirts/day) 960
batch
Capacity Utilisation 83%
Direct Labour Content(min/shirt) Cutting + Other operations 26.51
Direct Labour Cost ($/shirt) Labour cost =64 * 8 * 6 3.84
Direct Labour Utilisation 69%
Mikes production Process:
Time required for producing one unit from laying and cutting
operation=120/60*8=0.25 min
Cycle time of laser cutting machine is 2.5/5=0.5
Time required
Regular Shirt Number of for producing
Operation Labour Content workers one unit (in
min.)
Make Collar 3.9 8 0.49
Make Cuffs 2 4 0.50
Make Sleeves 0.65 2 0.33
Make Front 2.5 6 0.42
Make Back 1.7 4 0.43
Join Shoulder 0.66 2 0.33
Attach collar 1.65 4 0.41
Attach sleeves 1.55 4 0.39
Stitch Down sleeves 0.65 2 0.33
Sew Side seam 1.8 4 0.45
Attach cuffs 1.55 4 0.39
Hem Button 1.7 4 0.43
Inspect 1.5 4 0.38
Iron 1.95 4 0.49
Fold Package 1.75 4 0.44

Quantity Obtained Value

Actual Cycle Time (min/shirt) Bottle Neck = 30 min per batch 0.5
WIP Inventory Cutting + Other operations 1980
Manufacturing Lead Time(days) WIP/production Capacity 2.0625
Production Capacity (shirts/day) Bottle Neck =40 min per batch 960
Capacity Utilisation 94%
Direct Labour Content(min/shirt) Cutting + Other operations 26.01
Direct Labour Cost ($/shirt) Labour cost =65* 8 * 6 3.466666667
Direct Labour Utilisation Labour Utilised = 900 * 26.01 75%
Ikes production Process:
A. Regular Shirt Production
Regular Shirt Labour Time required/lbr/shrt (in
Operation Number of workers
Content min)
Make Collar 3.9 7 0.56
Make Cuffs 23 0.67
Make Sleeves 0.65 1 0.65
Make Front 2.5 5 0.50
Make Back 1.7 3 0.57
Join Shoulder 0.66 1 0.66
Attach collar 1.65 3 0.55
Attach sleeves 1.55 3 0.52
Stitch Down sleeves 0.65 1 0.65
Sew Side seam 1.8 3 0.60
Attach cuffs 1.55 3 0.52
Hem Button 1.7 3 0.57
Inspect 1.5 3 0.50
Iron 1.95 3 0.65
Fold Package 1.75 3 0.58
B. Customized Shirt
CUSTOM Shirt Labour Time required/lbr/shrt (in
Operation Number of workers
Content min)
Make Collar 3.9 1 3.90
Make Cuffs 21 2.00
Make Sleeves 0.65 1 0.65
Make Front 2.5 1 2.50
Make Back 1.7 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 1.8 1 1.80
Attach cuffs 1.55 1 1.55
Hem Button 1.7 1 1.70
Inspect 1.5 1 1.50
Iron 1.95 1 1.95
Fold Package 1.75 1 1.75
Quantity Obtained Value
Actual Cycle Time (min/shirt) Bottle Neck = 3.9 min per shirt 3.9 per shirt

WIP Inventory Cutting + Other operations 50


Manufacturing Lead Time(days) WIP/production Capacity 0.406504065
Production Capacity (shirts/day) Bottle Neck =3.9 min per shirt 123.0769231
Capacity Utilisation 81%
Direct Labour Utilisation(min/shirt) Cutting + Other operations 26.01
Direct Labour Cost ($/shirt) Labour cost =16* 8 * 6 7.68
Direct Labour Utilisation Labour Utilised = 100 * 26.01 34%
Question 1:

Mikes
plan
Ikes plan Ikes plan
Current Process
Quantity Regular Regular Custom
Regular Shirts
& Shirts Shirts
Custom
shirts
Actual Cycle Time(min./
0.5 0.5 0.67 3.9
shirt)
Manufacturing Lead Time
12.25 2.06 12.58 0.41
( days)
WIP Inventory (shirts) 11760 1980 9060 50
Production capacity (
960 960 720 123
shirts/ day)
Capacity Utilization 83.33% 93.75% 111.11% 81.30%
Direct Labour content
26.51 26.01 26.51 26.01
(min/shirt)
Direct Labour utilization 69.03% 75.02% 90.17% 33.80%
Direct labour Cost ( $/
3.84 3.47 3.43 7.68
shirt )
Question 2:

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 $4.50 $4.50
Total $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 $4.50 $4.50
Total $16.32 $20.54
Retail price $87.5 $87.5
Profit/shirt $71.18 $66.96

Total profit per shirt from Mikes plan is greater by $4.08

Mikes plan is better

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