The Executive Shirt Co. is currently deliberating a strategic expansion into the domain of custom-made shirts. In pursuit of this objective, the general manager of the company has delegated the responsibility to two of the organization's managers, tasking them with the development of comprehensive plans for the integration of custom shirt production into the company's current manufacturing processes.
Sylvie Ryckebusch
Harvard Business Review (696071-PDF-ENG)
October 25, 1995
Case questions answered:
- Compute the quantities for the current production as well as for Mike’s and Ike’s plans, assuming the plans are implemented as described in the case.
- Compare the two plans in terms of both regular shirt production and custom shirt production. Based on your analysis, what is your recommendation for Dwight Collier?
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Executive Shirt Co., Inc. Case Answers
1.) Compute the quantities for the current production as well as for Mike’s and Ike’s plans, assuming the plans are implemented as described in the “Executive Shirt Co., Inc.” case.
Regular Shirt Production
Calculation of actual production of shirts:
1) Given shirts produced =16000 shirts/month
2) Working hours = 8 hours /day
3) Working days in a week = 5 days
4) Number of weeks in month= 4 weeks/month
5) Total working hours = 5×4=20 days
6) Capacity = 16000/20 =800 shirts/day
7) Demand = 800 Shirts/day
The primary portion of sales for the company consists of a limited set of basic styles and colors. Large batches of each shirt type, differentiated by size and color, are produced.
The company utilizes a single computer-controlled cutting machine capable of cutting up to 60 layers of fabric simultaneously, accommodating up to 8 patterns in one cutting session. The cutting process itself requires a fixed time of 30 minutes, regardless of the number of patterns and layers.
However, the setup phase is a notable aspect of the process. Unrolling a layer of cloth takes 1.5 minutes, resulting in a total setup time of 90 minutes for 60 layers. The machine is currently operated by a team of 4 operators, and Executive Shirt Co. is operating at its maximum capacity, handling 60 layers and eight patterns concurrently.
1) Total Shirts = 60×8=480 shirts
2) Batch Size = 60
3) Time taken by the machine= (1.5×60)+30=120 mins
4) Ideal Flow rate = 480/120 = 4 shirts/min
5) Ideal Capacity = 1/4 = 0.25 min/shirt
6) Number of workers = 4
7) Labor Content = 0.25×4 = 1 worker minute /shirt
Bottleneck is making Cuffs, which is 960 shirts per day.
Capacity of the plant = 960 Shirts/ day
Actual Cycle Time = Available Time / Demand
= (480) / (800) = 0.60 minutes per shirt
Work in process Inventory = Sum of Average WIP x Batches
= (16+144+12+12+12) x 60 = 11760 Shirts
Manufacturing Lead Time = Work in process Inventory /(Capacity of the plant)
= (11760) / (800) = 14.7 days
Capacity Utilization = (Demand / Ideal capacity) x100
= (800/960)x100= 83.33%
Direct Labor Content = 26.51 mins (Table1)
Direct Labor Utilization = (Direct Labor Content x Daily Capacity) x100 / (Number of Labor)
= ((26.51x 800) / (8x60x64)) x 100 = 69.036 %
Direct Labor Cost (($/shirt) = No. of Workers x salary (worker x day) x total hours / (Daily Capacity)
= (64 x 6 x 8) / (800) = 3.84 $/shirt
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