Om Case Analysis Executive Shirt Company

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Q.1 Compute the following quantities for the current production process as well as for Mike’s and Ike’s plans, assuming the plans are implemented as described in the case. (50 points)

| Current ProcessRegular Shirts| Mike’s PlanRegular & Custom Shirts| Ike’s PlanRegularShirts| Ike’s PlanCustom Shirts| Actual Cycle Time (min/shirt)| 0.5| 0.5| 0.67| 3.9|
Manufacturing Lead Time (days)| 0.815| 0.052| 1.056| 0.058| WIP inventory (shirts)| 11760| 1980| 9060| 48|
Production Capacity (shirts/day)| 960| 960| 720| 123.07| Capacity Utilization| 83.33| 93.75| 111.11| 81.25|
Direct Labour Content (min/shirt)| 26.51| 26.45| 26.51| 26.01| Direct Labour Utilization| 69.04| 76.22| 90.17| 33.87| Direct Labour Cost ($/shirt)| 3.84| 3.47| 3.43| 7.68|

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 Content (min/shirt)| Number of Workers| Cycle Time (min/shirt)| Time taken for 1 batch (min)| | | | | Regular| Custom|
Make collar| 3.90| 8| 0.4875| 29.25| 2.4375|
Make cuffs| 2.00| 4| 0.5| 30.00| 2.5|
Make sleeves| 0.65| 2| 0.325| 19.50| 1.625|
Make front| 2.50| 6| 0.416| 25.00| 2.08|
Make back| 1.70| 4| 0.425| 25.50| 2.125|
Join shoulders| 0.66| 2| 0.33| 19.80| 1.65|
Attach collar| 1.65| 4| 0.4125| 24.75| 2.0625|
Attach sleeves| 1.55| 4| 0.3875| 23.25| 1.9375|
Stitch sleeves| 0.65| 2| 0.325| 19.50| 1.625|
Sew sideseam| 1.80| 4| 0.45| 27.00| 2.25|
Attach cuffs| 1.55| 4| 0.3875| 23.25| 1.9375|
Hem bottom| 1.70| 4| 0.425| 25.50| 2.125|
Inspect| 1.50| 4| 0.375| 22.50| 1.875|
Iron| 1.95| 4| 0.4875| 29.25| 2.4375|
Fold, Package| 1.75| 4| 0.4375| 26.25| 2.1875|
Cutting| 1.00| 4| 0.25| 120| 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)

Mike’s 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,...
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