Current 396 * 5 = 1980 60 * 151

  Current Process Mike’s Plan Ike’s Plan Regular Shirts Regular & Custom Shirts Regular Shirts Custom Shirts A) Actual Cycle Time (Min/shirt) Ideal Cycle Time : 2 minutes per cuff (8bottleneck) / 4 workers =  0.5 Total minutes of production / current production units  8*20*60/16000 = 0.6 Time for cutting with new machine = 2.

5/5 = 0.5 ( Which is same as time for cuffs.) Therefore Cycle time = 0.5 All labor content / one less worker for each category while cutting is still 0.25: Cuffs is still the bottleneck at 2 labor content / 3 workers = 0.

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66 2.5 / 5 = 0.5 labor content for cutting. With one employee at each sewing process, collar is new bottleneck at  = 3.90 B) Manufacturing Lead Time (days) (Work in progress inventory * Cycle Time) / (Number of Minutes in a working day) 11,760 * 0.

6 / 480  = 14.7 0.5 * 5 * (36+288+24+24+24) / 480 = 2.06 (9060 * 0.

66) / 480 = 12.58 (50 * 3.9) / 480 = 0.

41 C) WIP Inventory (shirts) Average WIP * Batch size 196 * 60 = 11,760 396 * 5 =  1980 60 * 151  = 9060 ( 15 * 3 ) at sewing + 5 at cutting  = 50 D) Production Capacity (shirts/day) Minutes available / CT 8 * 60 / 0.5 = 960  8  * 60  / 0.5 = 960  8 * 60 / 0.666 = 720  8 * 60 / 3.9 = 123 E) Capacity Utilization Number of units being produced now / Maximum production capacity 16000 / (960 * 20 days) = 83.33% (16000 + 2000) / (960 * 20) = 93.75% 16,000 / (720 * 20) =111.

11% monthly production capacity = 123 * 20 = 2460 Utilization = 2000 / 2460 = 81.25% F) Direct Labor Content (min/shirt) Time spent  in cutting + Time spent in Sewing (90 + 30 / (8 * 60) ) + 3.9 + 2 + 0.65 + 2.5 + 1.7 + 0.

66 + 1.65 + 1.55 + 0.65 + 1.8 + 1.

55 + 1.7 + 1.5 + 1.95 + 1.

75 = 25.76 ( or 25.69) (16000 / 18000) * 0.25   + (2,000 / 18,000) * 0.5 = 0.

2777 ( weighted avg. cutting time ) ( 25.76 – 0.25 ) + 0.2777 = 25.79 (90+30 / 80*60) + 3.9 + 2 + 0.65 + 2.5 + 1.7 + 0.66 + 1.65 + 1.55 + 0.65 + 1.8 + 1.55 + 1.7 + 1.5 + 1.95 + 1.75 =25.76 ( 0.5 ) + 3.9 + 2 + 0.65 + 2.5 + 1.7 + 0.66 + 1.65 + 1.55 + 0.65 + 1.8 + 1.55 + 1.7 + 1.5 + 1.95 + 1.75 = 26.01 G) Direct Labor Utilization ( Shirts produced per day * Direct labour content / (Number of labourers * working minutes per day) (800  * 25.76 ) /  ( 64 * 480 ) = 67.08% (900 * 25.79) / (65  * 480) =  74.39% (800  * 25.76) / (64 – 15) * 480) = 87.62% 100 * 26.01 / (16 * 480) =33.87% H) Direct Labor Cost ($ / shirt) Number of labourers  * Salary * hours worked / Number of shirts produced 64 ($6 * 8) / 800 = $3.84 65 ( $6 * 8) / 900  = $3.47 720 shirts / day on normal salary: 49 * $6 * 8 = $2352 80 remaining shirts * 0.67 = 53.6 minutes 53.6 / 60 * $9 = $8.04 49 * 8.04 = $393.96 Total: (393.96 + 2352) / 800 = $3.43 16 ($6 * 8 ) / 100 = 7.68