Executive Shirt Company

DCSN 310 ESC Case

Rani Zahr 3/22/2012

The Executive Shirt Company is considering expanding its operations by beginning to sell custom made shirts. Based on the data presented I would recommend that Mr. Collier follow Mikes production plan if he wants to optimize his probability of succeeding. Mikes Plan generates $7,780 more in operating income and is better built for scalability than Ikes. He also generates lower labor costs mainly by not paying or needing overtime, and has low inventory which increases flow rate. Compared to the current plan, Mike increases labor utilization by 7%, capacity utilization by 11% and lowers the cost of labor by $.37. Although Ike has better capacity and labor utilization he is doing it at the expense of higher labor costs by paying for overtime. Please see below tables for production and profit metrics.

Mike decided to keep both cutting machines although he knew that he could use the new machine and get rid of the old and still produce enough shirts to meet demand. Keeping the old machine would be a lot safer for the production process however; all the demand can be met by the new cutting machine even though it would now be the bottleneck along with the cuff making process. See table below. Selling the old machine is risky because if ESC were ever to expand then they would have to buy another machine as well as hire at the minimum one more employee to expedite the cuff making process.

Based on current demand there isnt much you need or really could do to speed up the production process for Mike. If you moved one of the designated cutting people to help make cuffs you could lower the cycle time to .49 which would increase your monthly capacity to roughly 980 which is a 2% increase. However, if you wanted to scale production to 1000 shirts per month then using Mikes plan and moving one cutting resource to making cuffs, we can hire two more employees to help out with collar making and ironing. The cycle time would now be .45 min/shirt with a production capacity of 1,066. Our labor utilization would increase to 80% and our labor cost would drop to $3.21. Please see the below detail for suggestions to Mikes production process.

Ikes plan over utilizes ESCs employees for the standard shirts and underutilizes their employees for the custom shirts. If we could combine some of the tasks in the custom production process and utilize them for the standard production process we could lower our cycle time to .6 min/shirt and eliminate our overtime costs. Please see table below to see Ikes modified plan.

The following tables highlight the data given to us by ESC to in order to generate the production process metrics above. Current Production Data:

Mikes Production Process

Ikes Production Process