Exhibit 4 : Cost Structure for a Standard-Sized Shirt (current production process)

cost in $
Raw Materials 7.00
Total Labor(Direct + Indirect*) 4.50
Other Indirect Costs 4.50
Total Manufacturing Cost 16.00
Wholesale Price 25.00
Retail Price 50.00

* Indirect labor costs include costs of material handling and supervisory labor.
 Exhibit 3 :Current production of Regular Shirts at ESC,Inc.

Average WIP
Number of (number of 60-
Type of Operation Number of workers Machines shirt batches
Cutting 4 1 16
Sewing 48 48 144
Inspection 4 12
Ironing 4 4 12
Packaging 4 12
64 196

Regular Shirts Capacity

Laber Content Number of Cycle Time (No. of
Operation (Minutes per shirt) Workers shirts/day)
Cutting 30.00 4
Setup for Cutting 1.50 4 0.25 1920
1. Make Collar 3.90 8 0.49 985
2. Make cuffs 2.00 4 0.50 960
3. Make sleeves 0.65 2 0.33 1477
4. Make front 2.50 6 0.42 1152
5. Make back 1.70 4 0.43 1129
6. Join shoulders 0.66 2 0.33 1455
7. Attach collar 1.65 4 0.41 1164
8. Attach sleeves 1.55 4 0.39 1239
9. Stitch down sleeves 0.65 2 0.33 1477
10. Sew side seam 1.80 4 0.45 1067
11. Attach cuffs 1.55 4 0.39 1239
12. Hem bottom 1.70 4 0.43 1129
13. Inspect 1.50 4 0.38 1280
14.Iron 1.95 4 0.49 985
15. Fold, Package 1.75 4 0.44 1097
26.51 64.00
Labor Content for Cutting 1

Current Process Regular

Actual Cycle Time(min./shirt)* 0.6
WIP Inventory(shirts) 11760
Manufacturing Lead Time(days) 14.7
Production Capacity(shirts/day)** 960
Capacity Utilization 83.33
Direct Labor Content(min./shirt) 26.51
Direct Labor Content Available(min/s 38.4
Direct Labor Utilization 69
Direct Labor Cost($/shirt) 3.84
Exhibit 5 Mike's plan for Regular and Custom Shirts

Average
WIP (in
Number of Number of batches of 5
Type of Operation Workers machines shirts each)
Cutting 5 2 36
Sewing 48 48 288
Inspection 4 24
Ironing 4 4 24
Packaging 4 24
65 396

Regular Shirts
Laber Content
(Minutes per Number of
Operation shirt) Workers
Cutting 30.00 4
Setup for Cutting 1.50 4
Cutting(Custom shirts) 2.50 1
1. Make Collar 3.90 8
2. Make cuffs 2.00 4
3. Make sleeves 0.65 2
4. Make front 2.50 6
5. Make back 1.70 4
6. Join shoulders 0.66 2
7. Attach collar 1.65 4
8. Attach sleeves 1.55 4
9. Stitch down sleeves 0.65 2
10. Sew side seam 1.80 4
11. Attach cuffs 1.55 4
12. Hem bottom 1.70 4
13. Inspect 1.50 4
14.Iron 1.95 4
15. Fold, Package 1.75 4
25.51
Mike's Plan Regular&Custom
Actual Cycle Time(min./shirt)* 0.53
WIP Inventory(shirts) 1980
Manufacturing Lead Time(days) 2.2
Production Capacity(shirts/day)** 960
Capacity Utilization 93.75
Direct Labor Content(min./shirt) 27.57 For Regular Shirt 27.76 For Custom Shirt
Direct Labor Content Available(min/s 34.67
Direct Labor Utilization 79.52
Direct Labor Cost($/shirt) 3.467
For Custom Shirt 26.01
Exhibit 6 Ike's Plan for Regular and Custom Shirts

Regular Shirts

Average WIP
Number of Number of (number of 60-
Type of Operation workers machines shirt batches)
Cutting 4 1 16
Sewing 36 36 108
Inspection 3 9
Ironing 3 3 9
Packaging 3 9
49 151

Regular Shirts Individual

Number of
Laber Content Capacity
Workers for Cycle time
(Minutes per (Reg.
Reg. shirts
Operation shirt) shirts/day)
Cutting 30.00 4
Setup for Cutting 1.50 4 1920
Cutting(Custom shirts) 2.50 1 960
1. Make Collar 3.90 7 0.56 862
2. Make cuffs 2.00 3 0.67 720
3. Make sleeves 0.65 1 0.65 738
4. Make front 2.50 5 0.50 960
5. Make back 1.70 3 0.57 847
6. Join shoulders 0.66 1 0.66 727
7. Attach collar 1.65 3 0.55 873
8. Attach sleeves 1.55 3 0.52 929
9. Stitch down sleeves 0.65 1 0.65 738
10. Sew side seam 1.80 3 0.60 800
11. Attach cuffs 1.55 3 0.52 929
12. Hem bottom 1.70 3 0.57 847
13. Inspect 1.50 3 0.50 960
14.Iron 1.95 3 0.65 738
15. Fold, Package 1.75 3 0.58 823
25.51 49 16
Ike's Plan Regular Custom
Actual Cycle Time(min./shirt)* 0.67 4.8
WIP Inventory(shirts) 9060 50
Manufacturing Lead Time(days) 12.6 0.5
Production Capacity(shirts/day)** 720 123
Capacity Utilization 111% 0.81
Direct Labor Content(min./shirt) 26.51 26.01
Direct Labor Content Available(min/s 33.1 76.8
Direct Labor Utilization 0.80 0.34
Direct Labor Cost($/shirt) 3.49 7.68
 Individual
Number of
Capacity
Workers for Cycle time
(cust.
Cust. shirts
shirts/day)

1 960
1 3.90 123
1 2.00 240
1 0.65 738
1 2.50 192
1 1.70 282
1 0.66 727
1 1.65 291
1 1.55 310
1 0.65 738
1 1.80 267
1 1.55 310
1 1.70 282
1 1.50 320
1 1.95 246
1 1.75 274
 Current(R only) Mike's Plan(R+C) Ike's Plan ( R )
Actual Cycle Time(min./shirt)* 0.60 0.53 0.67
WIP Inventory(shirts) 11760 1980 9060
Manufacturing Lead Time(days) 14.7 2.2 12.6
Production Capacity(shirts/day)** 960 960 720
Capacity Utilization 83.33 93.75 111.11
Direct Labor Content(min./shirt) 26.51 27.57 26.51
Direct Labor Content Available(min/shirt) 38.40 34.67 32.67
Direct Labor Utilization 69.04 79.52 81.15
Direct Labor Cost($/shirt) 3.84 3.47 3.43
Overtime (minutes) 53.33
Ike's Plan( C )
4.80
50
0.5
123.08
81.25
26.01
76.80
33.87
7.68