Decision Sheet

Executive Shirt Company, Inc.

Question 1 Compute the following quantities for the current production process as
well as for Mike’s and Ike’s plans, assuming that the plans are implemented as
described in the case.
Layers of shirts that can be cut = 60
Simultaneous patterns that can be cut = 8
Total shirts cut in one run = 60*8 = 480
Total time taken = Setup + Runtime = 90+30 = 120min
Regular shirts labour content (minutes per shirt) for cutting = 120 / 480 = 0.25 min / shirt 
Number of workers = 4

Current Mike’s Plan Ike’s Plan

Process

Regular shirts Regular & Custom Regular Custom

shirts shirts shirts

Actual Shirt Time 0.5 0.5 0.67 3.9

(min/shirt)

Manufacturing Lead Time 12.15 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 81.25

Direct Labour Content 25.76 25.79 25.76 26.01

(min/shirt)

Direct Labour Utilization 67.08 74.39 87.62 33.87

(%)

Direct Labour Cost ($/shirt) 3.84 3.47 3.43 7.68

Question 2 
Compare the two plans, in terms of both regular shirt production and custom-shirt
production. Based on your analysis, what is your recommendation for Dwight Collier?
By creating a Laser Cutting Machine for personalized shirts, Mr. Collier changed the
manufacturing process. He asked Mike and Ike, two of his managers, to create a
manufacturing schedule that would maximize the revenue from both items. The key
components of their plans include-
Mike's Strategy-
Use a single production line to produce both goods at the same time (other than the cutting
process) Eight batches of five standard shirts apiece; one batch of five customized shirts. 
Ike's Strategy-
To use a separate production line for both standard and personalized shirts. Eight batches of
standard shirts, each with six shirts.  One batch of five custom shirts.  

Question 3
Compare Mike's and Ike's plans. Provide your own justification stating which of the
two plans is better?
Comparison of the two strategies:
 Manufacturing cost of regular shirts manufactured with Mike’s strategy is higher than
the regular shirts manufactured using Ike’s Strategy.
 The difference in manufacturing cost is due to the higher expense for direct labour.
 As the regular shirts produced by both Mike and Ike retails at the same price, the
profit incurred by Ike is higher. The difference in profit is the same as the difference in
direct labour costs, which is $0.14 per shirt.
 In the case of customized shirts, the difference in manufacturing cost between the
strategies of Mike and Ike is again owing to the difference in expenses of direct
labour.
 Mike’s strategy to produce customized shirts incurs a way higher profit than Ike’s
strategy. The difference in profit between the two strategies of manufacturing
customized shirts in $4.22

Even though Ike's strategy for regular shirts incurs a higher profit than Mike, Mike’s strategy
is better and it is the one that should be adopted. This is because his strategy of customized
shirts had a profit margin that was way higher than the difference in the profit between the
strategies of Mike and Ike for regular shirts.