Q.

1 Compute the following quantities for the current production process as well as for Mikes
and Ikes plans, assuming the plans are implemented as described in the case. (50 points)

Actual Cycle Time (min/shirt)

Manufacturing Lead Time

Current

Mikes Plan

Ikes

Ikes

Process

Regular &

Plan

Plan

Regular Shirts

Custom

Regular

Custom

Shirts

Shirts
0.67

Shirts
3.9

0.5

0.5

(days)
WIP inventory (shirts)
Production Capacity

0.815

0.052

1.056

0.058

11760

1980

9060

48

(shirts/day)
Capacity Utilization
Direct Labour Content

960

960

720

123.07

83.33

93.75

111.11

81.25

26.51

26.45

26.51

26.01

69.04
3.84

76.22
3.47

90.17
3.43

33.87
7.68

(min/shirt)
Direct Labour Utilization
Direct Labour Cost ($/shirt)

Assumption: Throughout the case, it has been assumed that there is no specialization, i.e. the
work performed by all workers in a station is similar.
Each of the cases has been analysed separately, the quantities asked in the table have been
calculated for each case, and filled in the above table.
Current Process
The details of the process, as given in Exhibit 3, have been reproduced, along with the run
time and the time taken for each batch for each process have been calculated and shown in
the table below

Operation

Labour

Number of

Cycle Time

Content

Workers

(min/shirt)

(min/shirt)

Time taken for 1 batch

(min)
Regular

Custom

Make collar
Make cuffs
Make sleeves
Make front
Make back
Join shoulders
Attach collar
Attach sleeves
Stitch sleeves
Sew sideseam
Attach cuffs
Hem bottom
Inspect
Iron
Fold, Package
Cutting

3.90
2.00
0.65
2.50
1.70
0.66
1.65
1.55
0.65
1.80
1.55
1.70
1.50
1.95
1.75
1.00

8
4
2
6
4
2
4
4
2
4
4
4
4
4
4
4

0.4875
0.5
0.325
0.416
0.425
0.33
0.4125
0.3875
0.325
0.45
0.3875
0.425
0.375
0.4875
0.4375
0.25

29.25
30.00
19.50
25.00
25.50
19.80
24.75
23.25
19.50
27.00
23.25
25.50
22.50
29.25
26.25
120

2.4375
2.5
1.625
2.08
2.125
1.65
2.0625
1.9375
1.625
2.25
1.9375
2.125
1.875
2.4375
2.1875
2.5

(a) Actual cycle time for the process is the cycle time of its bottleneck operation, which,
in this case is making cuffs. Hence, actual cycle time = 0.5 min/shirt

(b) The above diagram shows the flow for the process. Using this, we can calculate the
manufacturing lead time as: 120 + 30 + 19.8 + 24.75 + 23.25 + 19.50 + 27 + 23.25 +
25.50 + 22.50 + 29.25 + 26.25 = 391.05s = 6.44 hrs = 6.44/8 = 0.815 days
(c) From Exhibit 3, WIP Inventory = 60 * (16 + 144 + 12 + 12 + 12) = 11,760 shirts
(d) Production Capacity = (8 hrs/day * 60 min)/ 0.5 = 960 shirts/day
(e) Current Production = 16,000/20 = 800 shirts/day
Hence, Capacity Utilization = 800/960 = 0.8333 = 83.33%
(f) Direct Labour Content = Sum of Labour Content for each process in above table =
26.51 min/shirt

(g) Direct Labour Cost, actual = (26.51/60)*$6 = $2.651/shirt

Direct Labour Cost paid = 64*8*20*$6/16000 = $3.84/shirt
Direct Labour Utilization = 2.651/3.84 = 69.04%
(h) Direct Labour Cost = $3.84/shirt (from above)

Mikes Plan
(a) The actual cycle time is same as in current process i.e. 0.5 min/shirt.
(b) Lead time is calculated in a similar procedure as above case = 2.5 + 1.65 + 2.0625 +
1.9375 + 1.625 + 2.25 + 1.9375 + 2.125 + 1.875 + 2.4375 + 2.1875 + 2.5 = 25.08 min
= 0.052 days
(c) From Exhibit 5, WIP Inventory = 5 * (36 + 288 + 24 + 24 + 24) = 1980 shirts
(d) Since the cycle time remains same, the total production capacity will also be the same
as the current process i.e. 960 shirts/day.
(e) Current Production = (16,000 + 2,000)/20 = 900 shirts/day
Hence, Capacity Utilization = 900/960 = 0.9375 = 93.75%
(f) Direct Labour Content
(g) Direct Labour Cost, actual = (26.45/60)*$6 = $2.645/shirt
Direct Labour Cost paid = 65*8*20*$6/18000 = $3.47/shirt
Direct Labour Utilization = 2.645/3.47 = 76.22%
(h) Direct Labour Cost = $3.47/shirt

Ikes Plan
We will prepare a similar Table for Ikes plan to calculate the various required parameters
Labour
Operation

Number of Workers

Content
(min/shirt)

Cycle Time

Time taken for 1

(min/shirt)

batch (min)

Regular

Custo

Regula

Custom

Regula

Custom

r
0.557

3.9

r
33.42

3.9

Make

3.90

m
1

collar
Make cuffs
Make

2.00
0.65

3
1

1
1

0.67
0.65

2.00
0.65

40.2
39

2.00
0.65

sleeves
Make front

2.50

0.5

2.50

30

2.50

Make back
Join

1.70
0.66

3
1

1
1

0.57
0.66

1.70
0.66

34.2
39.6

1.70
0.66

shoulders
Attach

1.65

0.55

1.65

33

1.65

collar
Attach

1.55

0.52

1.55

31.2

1.55

sleeves
Stitch

0.65

0.65

0.65

39

0.65

sleeves
Sew side

1.80

0.60

1.80

36

1.80

seam
Attach

1.55

0.52

1.55

31.2

1.55

cuffs
Hem

1.70

0.57

1.70

34.2

1.70

bottom
Inspect
Iron
Fold,

1.50
1.95
1.75

3
3
3

1
1
1

0.5
0.65
0.58

1.50
1.95
1.75

30
39
34.8

1.50
1.95
1.75

Package
Cutting

1.00

0.33

2.5

120

2.50

(a) The actual cycle time for regular shirts = 0.67 min/shirt
For custom shirts = 3.9 min/shirt
(b) Lead time for regular shirts = 508.2 min = 1.056 days
Lead time for custom shirts = 28.01 min = 0.058 days
(c) From Exhibit 6, WIP Inventory = 60 * (16 + 108 + 9 + 9 + 9) = 9060 regular shirts
For custom shirts, WIP Inventory = 15*3 + 3 = 48 shirts
(d) Production capacity for regular shirts = (8 * 60)/0.67 = 720 shirts/day.
Capacity for custom shirts = (8*60)/3.9 = 123.07 shirts/day.
(e) Current Production for regular shirts = 16,000/20 = 800 shirts/day.
Hence, Capacity Utilization for regular shirts = 800/720 = 1.11 = 111.11%
Current Production for regular shirts = 2,000/20 = 100 shirts/day.
Hence, Capacity Utilization for regular shirts = 100/123.07 = 0.8125 = 81.25%
(f) Direct Labour Content for the regular shirts will be the same as the current plan i.e.
26.51 min/shirt.
For the custom shirts, current cutting process labour content of 1 min/shirt is replaced
by 0.5 min/shirt so the new Direct Labour Content becomes 26.51 1 + 0.5 = 26.01
min/shirt.
(g) For regular shirts, Direct Labour Cost, actual = (26.51/60)*$6 = $2.651/shirt.

Overtime = (800 720)/90 = 0.89 hours/day

For regular shirts, Direct Labour Cost paid = (49*8*20*$6 + 49*0.89*20*$9)/16,000
= $3.43/shirt.
Direct Labour Utilization = (2.651/60)/(49*8*20/16,000) = 90.17%
For regular shirts, Direct Labour Cost, actual = (26.01/60)*$6 = $2.601/shirt.
For regular shirts, Direct Labour Cost paid = 16*8*20*$6/2000 = $7.68/shirt.
Direct Labour Utilization = 2.601/7.68 = 33.87%
(h) Overtime = (800 720)/90 = 0.89 hours/day
For regular shirts, Direct Labour Cost paid = (49*8*20*$6 + 49*0.89*20*$9)/16,000
= $3.43/shirt.
For regular shirts, Direct Labour Cost = $3.43/shirt
For custom shirts, Direct Labour Cost = $7.68/shirt

Q.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? (50
points)
Ans. We would recommend Dwight Collier to surely introduce custom shirt production as the
current utilization of the factory is less, which can be improved by producing custom shirts.
However both plans presented by Mike and Ike are not perfect and have scope for
improvement.
Mikes plan achieves the target regular and custom shirt productions and also increases the
utilization without paying people for overtime, hence reducing the cost per unit for
production of shirts. However, as the manufacturing lead time is very less there is scope for
increasing the batch size from 5. This would help in increasing the capacity utilization as well
as decrease the idle time for the cutting machine.
Ikes plan is faulty because the capacity regular shirts are not produced daily. An overtime of
0.89 hours per day is required to meet the production target for regular shirts. Hence, it leads
to increase in the cost per unit of reg5ular shirts. In addition to this, the capacity utilization
for the custom shirts is very low (33.87%) which is not desirable. Ikes plan has moved too
many workers from regular to custom shirts, thus reducing the capacity of regular shirts.

To conclude, we would suggest that Mikes plan is better than Ikes plan.