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 f etch 75% more price as compared to regular shirts. Currently, ESC is manufacturi ng 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 La ser 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 produc ts. The highlights of their plans are Mikes Plan: To go with one production line manufacturing both the products simult aneously (other than the cutting process) o Eight Batches of regular shirts with 5 shirts each o One batch of 5 custom shirts Ikes 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- Mikes Plan Mikes 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. Mikes 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 Mikes Shirt making process is equal to the time of cuff making=0.5 min. Table 2.2. Mikes Production Plan Quantity Obtained Value(Regular and Custom Shirt s) 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- Ikes Plan Regular Shirt Custom Shirt Ikes Production Plan Table 3.1. Ikes 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. Ikes 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. Ikes 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 Mikes and Ikes Production Plan Quantity Current Process Reg ular Shirts Mikes plan Regular & Custom shirts Ikes plan Regular Shirts Ikes plan C ustom 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 Mikes and Ikes 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 Mikes and Ikes Plan, we can see that the total profit per shirt from Mikes plan is greater $4.08. Thus, Mikes plan is b etter.