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Executive Shirt Company Explained
Executive Shirt Company Explained
Considering that the decision is taken prudently, we now shift our focus to the company’s
production process. The company has been using a batch process to produce standard-sized
shirts.
Only a few basic styles and colors constitute the major portion of sales, hence the company has
a limited number of varieties to produce. So, it has large batches of each kind of shirt (size and
color).
It has only one cutting machine, which is computer-controlled and can cut up to 60 layers of
cloth at the same time. Also up to 8 patterns can be cut simultaneously. The cutting process by
the machine takes 30 minutes irrespective of the number of patterns and number of layers.
But, the set up time is quite significant. It takes 1.5 minutes to roll out a layer of cloth and so for
60 layers; it takes 90 minutes setup time. The machine is being operated by 4 operators and the
company is using its maximum capacity, i.e. 60 layers and 8 patterns at a time. So,
Total time taken by one run = setup time + runtime = 90 + 30 = 120 minutes
Regular shirts labor content (minutes per shirt) for cutting = 120 / 480 = 0.25 min / shirt
Number of workers = 4
Now, tabulating this data with other the data from other production activities, we get
Time Time
Number taken per taken per
Regular Shirts Labor of shirt batch
Operation Content (minutes per shirt) workers (minutes) (minutes)
1. Cutting 0.25 4 0.06 3.75
2. Make collar 3.9 8 0.49 29.25
3. Make cuffs 2 4 0.50 30
4. Make sleeves 0.65 2 0.33 19.5
5. Make front 2.5 6 0.42 25
6. Make back 1.7 4 0.43 25.5
7. Join shoulders 0.66 2 0.33 19.8
8. Attach collar 1.65 4 0.41 24.75
9. Attach sleeves 1.55 4 0.39 23.25
10. Stitch down sleeves 0.65 2 0.33 19.5
11. Sew side seam 1.8 4 0.45 27
12. Attach cuffs 1.55 4 0.39 23.25
13. Hem bottom 1.7 4 0.43 25.5
14. Inspect 1.5 4 0.38 22.5
15. Iron 1.95 4 0.49 29.25
15. Fold, package 1.75 4 0.44 26.25
Total 25.76 64 6.27 374.05
Thus we see that the maximum time taken by a process in 30 min / labor / batch, which forms
the bottleneck and represents the cycle time. The cycle time / shirt = 30 / 60 = 0.5 min / shirt.
The work-in-process inventory = Total number of batches in all operations * Batch size
Now we can apply Little’s Law to calculate the throughput time which is equal to the
manufacturing lead time in this case.
By Little’s Law,
= 11760 * 0.5
= 5880 minutes
Since production goes on for 8 hrs per day, manufacturing lead time = 5880 / (8 * 60)
= 12.25 days
Total number of shirts produced per month is 16,000. The company works for 20 days a month.
In, 8 hours a day, the company can produce 60 * 8 * (1/0.5) = 960 shirts, which is the current
production capacity. But it needs to produce only 800 shirts.
So, the capacity utilization = (800 / 960) * 100 = 83.33%
The actual labor utilized = Number of shirts produced * Direct labor content
= 800 * 25.76
= 20608 minutes
The available labor for utilization = Total number of workers * Hours per day * 60
= 64 * 8 * 60
= 30720 minutes
In this plan, the new “low-ply” laser cutting machine would take 2.5 minutes to produce 5
shirts. One additional worker needs to be hired to operate this machine.
Since this is the same as the maximum time taken for a single sewing process causing the
bottleneck (make cuffs), the cycle time / shirt will remain equal to 0.5 minutes
Here the time taken is 2.5 min / labor / batch, which forms the bottleneck and represents the
cycle time. The cycle time / shirt = 2.5 / 5 = 0.5 min / shirt.
We now proceed to compute the operations metrics for the current process.
The work-in-process inventory = Total number of batches in all operations * Batch size
Now we can apply Little’s Law to calculate the throughput time which is equal to the
manufacturing lead time in this case.
By Little’s Law,
= 1980 * 0.5
= 990 minutes
Since production goes on for 8 hrs per day, manufacturing lead time = 990 / (8 * 60)
= 2.06 days
Total number of shirts produced per month is 16000 + 2000 = 18000. The company works for 20
days a month.
In, 8 hours a day, the company can produce 60 * 8 * (1/0.5) = 960 shirts, which is the current
production capacity. But it needs to produce only 900 shirts.
For calculating the direct labor content, we have to find out the direct labor content values for
sewing and cutting separately.
For the cutting operation, since both the new and old machines are used, the weighted average
of the individual DLCs are considered
DLC for cutting = (No of custom-made shirts * Time taken for each custom-made shirt +
No of regular shirts * Time taken for each regular shirt) / Total no of shirts
The actual labor utilized = Number of shirts produced * Direct labor content
= 900 * 25.79
= 23211 minutes
The available labor for utilization = Total number of workers * Hours per day * 60
= 65 * 8 * 60
= 31200 minutes
For the regular shirts, the direct labor content will be the same as in the current process as
here the new cutting machine is kept separate from the regular shirt manufacturing process.
Therefore, the direct labor content = 25.76 minutes/shirt for regular shirts
Here, however the number of workers in each process is reduced by one. Therefore, the cycle
time may change.
Time Time
Number taken per taken per
Regular Shirts Labor of shirt batch
Operation Content (minutes per shirt) workers (minutes) (minutes)
1. Cutting 0.25 4 0.06 3.75
2. Make collar 3.9 7 0.56 33.43
3. Make cuffs 2 3 0.67 40
4. Make sleeves 0.65 1 0.65 39
5. Make front 2.5 5 0.5 30
6. Make back 1.7 3 0.57 34
7. Join shoulders 0.66 1 0.66 39.6
8. Attach collar 1.65 3 0.55 33
9. Attach sleeves 1.55 3 0.52 31
10. Stitch down sleeves 0.65 1 0.65 39
11. Sew side seam 1.8 3 0.6 36
12. Attach cuffs 1.55 3 0.52 31
13. Hem bottom 1.7 3 0.57 34
14. Inspect 1.5 3 0.5 30
15. Iron 1.95 3 0.65 39
15. Fold, package 1.75 3 0.58 35
Total 25.76 49 8.23 492.78
= 9060 shirts
Similar to the other plans, we can calculate the manufacturing lead time
Direct labor utilization = (800 * 25.76) / (49 * 8 * 60) = 20608 / 23520 = 0.8762
For calculating the direct labor cost, since there is overutilization of capacity, we need to
consider the overtime cost also.
= 5 + 15 * 3 = 50 shirts
Since a single shirt is processed at a time by a single worker, the cycle time is the maximum of
all the individual regular shirt labor content = 3.9 minutes / shirt
Direct labor content = Labor content for cutting + labor content for processing
Direct labor utilization = (100 * 26.01) / (16 * 8 * 60) = 2601 / 7680 = 0.3387