Mae Ann M.

de Leon – Industrial
Engineer []CAREER EPISODE 1

Introduction

CE1.1
Project Name: Embroidery Production Expansion (Capacity Planning)
Chronology: August 2010 – Present
Position: Deputy Manager - Planning
Name of the Organisation: WestPoint Home (Bahrain) W.L.L.
Location: South Alba Industrial Area, Askar, Kingdom of Bahrain

Background

CE1.2 Currently, our company owns 5 embroidery machines. In addition to these

capacities, we still source more than 100% of our capacity because of high
demands of embroidery products these days and we cannot accommodate all of it
on the specified time. The Company (WPH) is considering an expansion for our
embroidery production department. Factors affecting this proposal are the
following reasons:
 Embroidered products are giving more profit to the company.
 Huge amount of money being allocated for air and sea shipments (exporting-
sending of fabric for embroidery/importing back from the suppliers).
 Higher price of suppliers compare to our in-house price (approximately 20-
35% higher).
 Longer lead-time required for sending and taking back the fabric (14 days
FCL or 28 days LCL or 7 days air shipping – only for one way in addition to
usual 4 weeks production of the supplier)
 Quality issues of the embroidered fabric especially if it’s a new supplier.
Since usually our suppliers are overseas, some quality problems were
detected only when the supply already arrived in house (which is usually 2-3
weeks before shipment date) which makes our deliveries very critical.
 Very difficult to make an adjustments (if program/order was cancelled or
pulled in).
 The whole process is very complicated and requires more people to do all
these documentations.

CE 1.3 Considering all the mentioned reasons above, our Managing Director (MD)
asked the Planning/Operations Manager, Deputy Manager (me) and the GM -
Stitching(who is managing this department) were asked to collaborate and study
how many machines are required to totally remove this sourcing requirement which
is usually done outside Bahrain (Pakistan and China).

CE1.4 The Objective of the study is to determine the most accurate calculations
of identifying the number of machines. There will be 2 computations, one will be
done by me and one will be done by the GM Stitching and see if we’ll have the

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 Mae Ann M. de Leon – Industrial
Engineer []CAREER EPISODE 1

same figure and defend the basis of our calculation. The reason that our MD asked
for two calculations is that to make sure that all factors will be considered in the
calculation.

Personal Engineering Activity

CE1.5 All the historical data are available with me since I am the one planning the
Embroidery machines for the last 6 months. Also I have an access to see the
upcoming demands (future forecasts) which will help me get the most accurate
data. I have all the planned sourcing from version Aug 31, 2010 NER (Net
Embroidery requirements) till Oct 5, 2010. So there will be 6 versions of Demands
in which I could compare the trends of the forecast.

CE 1.6 This Net Embroidery Requirements (NER) are showing all from current week
+15 weeks demands. Since there are 16 weeks demands, the first 4 weeks are
usually CONFIRMED plans and in which no forecasts are accommodated during this
time frame. Also the 4 weeks exclusion is lead-time for the back process of the
forecasts which includes preparation of the fabric greige, purchase of threads, and
processing of fabric. So it means we only have 12 weeks to produce the
requirements of 16 weeks future forecasts.

CE 1.7 I thought to apply the use of Statistics in determining the best data to use
plus the basic Industrial Production Calculations to solve this problem. First step I
did was to identify the current running situation.

Shift = 9 3/4 hrs/shift (1/4 hr is designated to other factors such as change-over

and maintenance work)
No. of Shifts = 2 shifts in a day
No. of Working days in a week = 6 days/week (Friday is always OFF)
Target completion = 12 Weeks = 72 days (Refer to CE1.6 for explanation).

CE 1.8 Second Step is taking the average of all the sourcing requirements for the
specified time period, so I got the following data:

Average
CUSTOMER* Demand (Lm)
A 339,128
B 23,891
C 39,551
D 23,120
E 105,508
Total 531,198
*Note – customer name is disclosed for company policy.

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 Mae Ann M. de Leon – Industrial
Engineer []CAREER EPISODE 1

CE 1.9 I also realized that each customer designs varies in production so I took the
weighted average instead of just getting the average of rate.
CUSTOMER Average (Lm) RATE (Lm/hr) WT. AVERAGE
A 339,128 55 18,652,040
B 23,891 67 1,600,697
C 39,551 19 751,469
D 23,120 55 1,271,600
E 105,508 65 6,858,020
Total 531,198 Total 29,133,826

CE 1.10 Using the formula to calculate the number of machine:

1.67 tU
n=
Tt ec
n - Number of machines = Unknown
Given:
ec - efficiency of capital equipment in percent of running time = 19.5/20 = 0.975 or 97.5%
t - Time to manufacture one linear meter (in min) = 1.121 min
Tt - hours worked per day = 9.75 hrs / shift
U - Unit per day = 531,198 Lm/72 days = 7,377.75 Lm/ day = 3,688.875 Lm/ shift

CE 1.12 Calculation:
n = 1.67(1.121 min/Lm) (7,377.75Lm/shift)/ (9.75hrs/shift X97.5)
n = 7.08 machines
n ≈ 7 machines

CE 1.13 On the other hand, GM Stitching collaborated with his people in production
(Technical Managers). My calculation and GM’s calculation closely matched
although he used a different method in this matter. Based on his calculation we
need 7.10 machines which is 0.28% difference with my result making it almost
negligible to consider.

CE 1.14 GM Stitching was also in favor of the calculation method that I used.
Before he was very critical with all my work since I am in the management side but
after collaborating with him in this project, he become more cooperative especially
if I require something from their department.

CE1.15 Last month, our MD received my report he already discussed with our COO
though nothing is finalized yet as of today. I am proposing to work on the costing
to give a better and more firm analysis to dissect all the factors to be considered
(aside from this consideration of demands). Currently, I am on the process of
initializing requirements for the machine costs to purchasing, product costs,
shipment costs and other fixed costs for further analysis.

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 Mae Ann M. de Leon – Industrial
Engineer []CAREER EPISODE 1

Summary

CE1.16 Capacity Expansion is a big step that a Company could make because it
involves a huge investment. So a good judgment on how to calculate the
requirements, how are the data to be managed and accurately present are
necessary in order to have help in Management decision making and Operations
research. I view this project as an additional accomplishment of my
Industrial/Manufacturing Engineering career and points to my management skills.