Executive Shirt Company

Topics: Capacity utilization, Mathematics, Assumption of Mary Pages: 1 (346 words) Published: April 2, 2009
Executive Shirt Comapny
Question # 1
The table for current production, Mike and Ike’s plan is given below: Current Process Mikes Plan Ike's Plan
Regular Shirts Regular & Custom Shirts Regular Shirts Custom Shirts Actual Cycle Time (min/shirt) 0.5 0.5 0.67 3.9
Manufacturing Lead Time (days) 12.25 2.06 12.58 0.41
WIP inventory (shirts) 11760 1980 9060 50
Production Capacity (Shirts/day) 960 960 720 123
Current Production(Shirts/day) 800 900 800 100
Capacity utilization 83.33% 93.75% 111.11% 81.25%
Direct Labor Content (min/shirt) 25.76 25.79 25.76 26.01
Actual Labor Time 20608 23209 20608 2601
Available Labor Time (min) 30720 31200 23520 7680
Direct Labor Utilization 67.08% 74.39% 87.62% 33.87%
Direct Labor Cost ($/Shirt) 3.84 3.47 3.33 7.68
Indirect Labor 0.66 0.66 0.66 0.66
Total Overtime (hrs/day) 0 0 5.15 0
Total Labor ($) 4.5 4.13 9.14 8.34

We begin by stating assumptions, and then we will explain how we calculated the figures mentioned in above table. Assumptions:
• For custom shirts, the time for new cutting machine is 2.5 minutes; this includes the roll out time and cutting time. • We are taking the assumption that they are doing no rework. We will now explain each calculation, how we calculated cycle time, Manufacturing lead time (MLT), WIP inventory etc. Actual Cycle Time (min/shirt):

In order to calculate cycle time, we know that cycle time of a process is the cycle time of its bottleneck operation. In the current process we are using a batch size of 60 and we are provided with the cycle time of each operation in the case (Exhibit-3). We can get the cycle time of each operation by dividing the time taken to complete one batch by the number of batches simultaneously worked upon in each operation (Detailed explanation given in Exhibit-1). This will give us the cycle time in minutes per shirt. Then...
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