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OPERATIONS MANAGEMENT EXECUTIVE SHIRT COMPANY, INC

GROUP 5
AMAN CHINDALIA (1411005) | DIVYA HARSHINI R (1411017) | MALLIKARJUNA KALIKA (1411028) |
NISHANT KUMAR PATI (1411039) | ROSE ANN VARGHESE (1411050) | TANULEKHA ROY (1411062)
CASE STUDY ANALYSIS

Solution to Question 1




Particulars Current
Process
Mike Plan Ikes Plan
Regular
Shirts
Regular &
Custom Shirts
Regular
Shirts
Custom
Shirts
a)Actual Cycle Time (min/shirt) 0.60 0.53 0.67 4.8
b) Manufacturing Lead Time (days) 14.7 2.19 12.64 0.5
c) WIP Inventory (shirts) 11,760 1,980 9,060 50
d) Production Capacity (shirts/day) 960 960 720 123
e) Capacity Utilisation 83.33% 93.75% 111.73% 81.30%
f) Direct Labour Content (min/shirt) 26.51 26.51 (R)
26.01 (C)
26.51 26.01
g) Direct Labour Utilisation 69.04% 76.30% 90.17% 33.87%
h) Direct Labour Cost ($/shirt) 3.84 3.47 3.43 7.68
OPERATIONS MANAGEMENT EXECUTIVE SHIRT COMPANY, INC
GROUP 5
AMAN CHINDALIA (1411005) | DIVYA HARSHINI R (1411017) | MALLIKARJUNA KALIKA (1411028) |
NISHANT KUMAR PATI (1411039) | ROSE ANN VARGHESE (1411050) | TANULEKHA ROY (1411062)
Solution to Question 2

Shirt production primarily involves three steps primarily three steps- first- layout and cutting,
second- sewing and third- inspecting, ironing and packing.
Cutting- In Mikes plan, one new worker will be dedicated for cutting the 100 custom made
shirts in one day at the rate of 5 shirts per 2.5minutes. And cutting of 800 regular shirts in one
day will be done by the existing four workers at the rate of 120 minutes (layouting and cutting)
for 480 shirts. The cutting process remains the same as Mikes plan.
Sewing and Remaining Steps- In Mikes plan, sewing and other operations on custom and
regular shirts are done by the same set of workers and the batch size is reduced to 5 whereas in
Ikes case, all the processes are divided into two dedicated parts, one each for regular and custom
shirts. In this set up, one worker from each of the 15 post cutting steps were moved from regular
to new custom shirt line. Thus, there were only 49 workers for regular and 16 workers for
custom shirts.
Parameters for comparison-
1) Direct Labor Cost
In the case of Mikes proposal, the total direct labor costs for custom shirts
Custom:
Labour cost in Mikes plan = 2,000 shirts * 3.47 $/shirt = 6940 $
Labour cost in Ikesplan = 2,000 shirts * 7.68 $/shirt = 15,360 $
Regular:
Labour cost in Mikes plan = 16,000 shirts * 3.47 $/shirt = $55,520
Labour cost in Ikesplan = 16,000 shirts * 3.43 $/shirt = $54,880
Total Labour cost in Mikes plan=$ 62,460
Total Labour cost in Ikes plan = $70,240
Difference in the Labour costs between two plans= $ 7,780
Thus, taking into account labour cost involved, it is evident that Mike has a more cost efficient
plan than Ike.





OPERATIONS MANAGEMENT EXECUTIVE SHIRT COMPANY, INC
GROUP 5
AMAN CHINDALIA (1411005) | DIVYA HARSHINI R (1411017) | MALLIKARJUNA KALIKA (1411028) |
NISHANT KUMAR PATI (1411039) | ROSE ANN VARGHESE (1411050) | TANULEKHA ROY (1411062)
2) Capacity and Labour Utilization
Huge difference in the cost structure of Mikes and Ikes proposals is due to the differences in
their respective efficiencies. From table, we infer that the capital and labour efficiencies have
both increased from the regular process.
In Ikes plan, there is over utilization in capacity (111.11%) for regular shirts for which they
have to be paidovertime. The utilization in capacity has slightly reduced to 81.30% from the
Regular process (83.33%) for custom made shirts.
Similarly, labour utilization has increased from 69.04% to 90.17% in Regular process but it is
drastically low (33.87%) for Custom shirts. This implies many employees are idle. From this is
evident that the structure is highly imbalanced and therefore inefficient.
In Mikes plan, capacity utilization has increased from 83.33% to 93.75%. Direct labour
utilization has also improved from 69.04% to76.30%
From the above,Mikesplan has an edge over Ikes in utilization criteria as well

3) Design
In Ikes process, since there is only one worker in each of the 15 operational units, if ones
persons work is interrupted for various reasons, the subsequent units are influenced by this slack
time. In contrast, Mikes process has more than one worker assigned to each unit;
interdependency among units is reduced significantly.

Conclusion
Based on the above analysis, we recommend Mikes process over Ikes process.
EXECUTIVE SHIRT COMPANY, INC
CALCULATIONS AND APPENDIX

CALCULATIONS
Particulars Current Process Mike Plan Ikes Plan
Regular Shirts Regular &
Custom Shirts
Regular Shirts Custom Shirts
Actual Cycle
Time=Total
minutes per
day/minutes per
day or bottleneck
activity time
whichever is
higher
Production time
per shirt =
480/800 = 0.6

Bottleneck time
(make cuffs) =
0.5
Production time
per shirt =
480/900 = 0.53

Bottleneck time
(make cuffs) =
0.5
Production time
per shirt =
480/800 = 0.6

Bottleneck time
(make cuffs) =
0.67
Production time
per shirt =
480/100 = 4.8

Bottleneck time
(make collars) =
3.9
Manufacturing
Lead time =
(WIP*cycle
time/total
minutes in a day)
(11760*0.6)/480
= 14.7 days
(1980*0.53)/48
0= 2.19 days
(9060*0.67)/480
= 12.64 days
(50*4.8)/480=
0.5 days
WIP
Inventory=Sum(
Average
WIP*No.of
shirts per batch)
196*60= 11760 (36+288+24+24
+24)*5= 1980
(16+108+9+9+9)*
60= 9060
(15*3)=45+ 5 in
cutting= 50
Production
Capacity=
Number of
minutes in a
day/Bottle Neck
Cycle Time
(8*60)/0.5= 960 (8*60)/0.5= 960 (8*60)/0.67= 720 (8*60)/3.9= 123
e) Capacity
Utilisation=(No.
of shirts made in
a day/Production
Capacity)*100%
800/960
= 83.33%
((800+100)/960
)*100
= 93.75%
(800/720)*100
= 111.11%
(100/123)*100
= 81.30%
f) Direct Labour
Content = Total
labour time for 1
shirt
(Refer Exhibit
B) 26.51
Regular= (Refer
Exhibit C)
26.51

Custom= (Refer
Exhibit C) =
26.01
Refer Exhibit D =
26.51


Refer Exhibit D =
26.01

























EXECUTIVE SHIRT COMPANY, INC
CALCULATIONS AND APPENDIX




Exhibit A
Process Flow


g) Direct Labour
Utilisation=
(Shirts per day
*Direct Labour
Content)/ total
labour minutes
in a day
(800*26.51)/(64
*480)= 69.04%
((800*26.51)+
(100*26.01))/
(65*480)=
76.3%
(800*26.51)/(49*
480)= 90.17%
(100*26.01)/(16*
480)= 33.87%
h) Direct Labour
cost= (total
labour*salary per
day)/total shirts
in a day
(64*6*8)/800=
3.84 $/shirt
(65*6*8)/900=
3.47$/shirt
((49*6*8))+(49*9
*80*0.67/60))=
3.43$/shirt
(16*6*8)/100=
7.68 $/shirt
EXECUTIVE SHIRT COMPANY, INC
CALCULATIONS AND APPENDIX

Exhibit B


Current Process


800 shirts per day
(16,000 shirts per month | 20 working days | 8 hours / day)


Operation Min/shirt Workers
Cycle Time
(min/shirt) Capacity Utilisation
Laying + Cutting 1.00 4 0.25 1920.0 41.67%
Make Collar 3.90 8 0.49 984.6 81.25%
Make Cuff 2.00 4 0.50 960.0 83.33%
Make Sleeve 0.65 2 0.33 1476.9 54.17%
Make Front 2.50 6 0.42 1152.0 69.44%
Make Back 1.70 4 0.43 1129.4 70.83%
Join Shoulders 0.66 2 0.33 1454.5 55.00%
Attach Collar 1.65 4 0.41 1163.6 68.75%
Attach Sleeve 1.55 4 0.39 1238.7 64.58%
Stitch Down Sleeves 0.65 2 0.33 1476.9 54.17%
Sew Side Seam 1.80 4 0.45 1066.7 75.00%
Attach Cuffs 1.55 4 0.39 1238.7 64.58%
Hem Bottom 1.70 4 0.43 1129.4 70.83%
Inspect 1.50 4 0.38 1280.0 62.50%
Iron 1.95 4 0.49 984.6 81.25%
Fold, Package 1.75 4 0.44 1097.1 72.92%
Total 26.51 64



EXECUTIVE SHIRT COMPANY, INC
CALCULATIONS AND APPENDIX

Exhibit C


Mike's Process


800 regular shirts + 100 custom shirts per day
(16,000 regular + 2,000 custom per month | 20 working days | 8 hours / day)


Operation Min/shirt Workers
Cycle Time
(min/shirt) Capacity Utilisation
New Cutting
Machine 0.5 1 0.50 960.0 10.42%
Laying + Cutting 1.00 4 0.25 1920.0 41.67%
Make Collar 3.90 8 0.49 984.6 91.41%
Make Cuff 2.00 4 0.50 960.0 93.75%
Make Sleeve 0.65 2 0.33 1476.9 60.94%
Make Front 2.50 6 0.42 1152.0 78.13%
Make Back 1.70 4 0.43 1129.4 79.69%
Join Shoulders 0.66 2 0.33 1454.5 61.88%
Attach Collar 1.65 4 0.41 1163.6 77.34%
Attach Sleeve 1.55 4 0.39 1238.7 72.66%
Stitch Down Sleeves 0.65 2 0.33 1476.9 60.94%
Sew Side Seam 1.80 4 0.45 1066.7 84.38%
Attach Cuffs 1.55 4 0.39 1238.7 72.66%
Hem Bottom 1.70 4 0.43 1129.4 79.69%
Inspect 1.50 4 0.38 1280.0 70.31%
Iron 1.95 4 0.49 984.6 91.41%
Fold, Package 1.75 4 0.44 1097.1 82.03%
Total (regular) 26.51 64
Total (custom) 26.01 61


EXECUTIVE SHIRT COMPANY, INC
CALCULATIONS AND APPENDIX

Exhibit D


Ike's Process


800 regular shirts + 100 custom shirts per day but produced separately
(16,000 regular + 2,000 custom per month | 20 working days | 8 hours / day)


REGULAR
Operation Min/shirt Workers
Cycle Time
(min/shirt) Capacity Utilisation
Laying + Cutting 1.00 4 0.25 1920.0 41.67%
Make Collar 3.90 7 0.56 861.5 92.86%
Make Cuff 2.00 3 0.67 720.0 111.11%
Make Sleeve 0.65 1 0.65 738.5 108.33%
Make Front 2.50 5 0.50 960.0 83.33%
Make Back 1.70 3 0.57 847.1 94.44%
Join Shoulders 0.66 1 0.66 727.3 110.00%
Attach Collar 1.65 3 0.55 872.7 91.67%
Attach Sleeve 1.55 3 0.52 929.0 86.11%
Stitch Down Sleeves 0.65 1 0.65 738.5 108.33%
Sew Side Seam 1.80 3 0.60 800.0 100.00%
Attach Cuffs 1.55 3 0.52 929.0 86.11%
Hem Bottom 1.70 3 0.57 847.1 94.44%
Inspect 1.50 3 0.50 960.0 83.33%
Iron 1.95 3 0.65 738.5 108.33%
Fold, Package 1.75 3 0.58 822.9 97.22%
Total 26.51 49

















EXECUTIVE SHIRT COMPANY, INC
CALCULATIONS AND APPENDIX




CUSTOM
Operation Min/shirt Workers
Cycle Time
(min/shirt) Capacity Utilisation
Laying + Cutting
(New) 0.50 1 0.50 960.0 10.42%
Make Collar 3.90 1 3.90 123.1 81.25%
Make Cuff 2.00 1 2.00 240.0 41.67%
Make Sleeve 0.65 1 0.65 738.5 13.54%
Make Front 2.50 1 2.50 192.0 52.08%
Make Back 1.70 1 1.70 282.4 35.42%
Join Shoulders 0.66 1 0.66 727.3 13.75%
Attach Collar 1.65 1 1.65 290.9 34.38%
Attach Sleeve 1.55 1 1.55 309.7 32.29%
Stitch Down Sleeves 0.65 1 0.65 738.5 13.54%
Sew Side Seam 1.80 1 1.80 266.7 37.50%
Attach Cuffs 1.55 1 1.55 309.7 32.29%
Hem Bottom 1.70 1 1.70 282.4 35.42%
Inspect 1.50 1 1.50 320.0 31.25%
Iron 1.95 1 1.95 246.2 40.63%
Fold, Package 1.75 1 1.75 274.3 36.46%
Total 26.01 16