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Manufacturing Lead Time (MLT) = Cycle Time (CT) * Works in Progress (WIP)
i. CT = 0.5 minutes ii. WIP individual shirts = (396 batches * 5 shirts / batch) = 1,980 iii. MLT in days = (0.5 * 1,980) / 480 minutes per day = 2.06 days
c. Total individual shirts as WIP = Sum of average batches * 5 shirts per batch
i. WIP shirts = 396 batches * 5 shirts per batch = 1,980 shirts as WIP
d. Production capacity of system at continuous 100% utilization (minutes)
i. Production capacity = minutes per day / CT of system ii. Production capacity = 480 / 0.5 = 960 units per day @ continuous 100% utilization
e. Production capacity utilization = monthly production / monthly production capacity
i. Current monthly production is 16,000 regular + 2000 custom shirts (given in case) ii. Total monthly capacity = 18,000 (900 per day * 20 days per month) iii. Production utilization = 18,000 / 19,200 = 93.8%
f. Direct Labor content = sum of time at all stations + time per shirt for cutting
i. Sum of time at all stations = 25.51 minutes per shirt ii. New machine can cut 1 pattern on five layers in 2.5 …show more content…
Firstly, to deduce the total cost for the custom shirts each month, the Direct Labour Cost from each plan can be multiplied by 2000 (the desired quantity produced). By doing this we learn that Ike’s total cost for custom shirts is $7.68 x 2000 = $15,360, compared to Mike’s $3.47 x 2000 = $6,940. This results in an $8,420 cost difference in favour of Mike’s plan. Production of regular shirts on the other hand are cheaper using Ike’s process, that is Ike’s labour costs are $3.43 x 16,000 (desired quantity of regular shirts) = $54,880 compared with Mike’s labour costs of $3.47 x 16,000 = $55,520. The difference between the two is only $640, which is fairly insignificant, and leaves the total cost difference between the two plans at $7,780 in favour of Mike. The great disparity in cost between the two is mainly due to the efficiency of each proposal. Whilst Mike increases the efficiency of both capacity and labour utilization in the factory (absorbing excess capacity and increasing efficiency from 83% to 93.75% as well as improving labour efficiency by 7.31%), Ike over-utilizes capacity in his regular shirt production line and severely under-utilizes capacity in his custom shirts production line. The result of this is that he has to pay the workers on the regular shirt line overtime whilst the workers on the custom shirt line are frequently starved and
i. CT = 0.5 minutes ii. WIP individual shirts = (396 batches * 5 shirts / batch) = 1,980 iii. MLT in days = (0.5 * 1,980) / 480 minutes per day = 2.06 days
c. Total individual shirts as WIP = Sum of average batches * 5 shirts per batch
i. WIP shirts = 396 batches * 5 shirts per batch = 1,980 shirts as WIP
d. Production capacity of system at continuous 100% utilization (minutes)
i. Production capacity = minutes per day / CT of system ii. Production capacity = 480 / 0.5 = 960 units per day @ continuous 100% utilization
e. Production capacity utilization = monthly production / monthly production capacity
i. Current monthly production is 16,000 regular + 2000 custom shirts (given in case) ii. Total monthly capacity = 18,000 (900 per day * 20 days per month) iii. Production utilization = 18,000 / 19,200 = 93.8%
f. Direct Labor content = sum of time at all stations + time per shirt for cutting
i. Sum of time at all stations = 25.51 minutes per shirt ii. New machine can cut 1 pattern on five layers in 2.5 …show more content…
Firstly, to deduce the total cost for the custom shirts each month, the Direct Labour Cost from each plan can be multiplied by 2000 (the desired quantity produced). By doing this we learn that Ike’s total cost for custom shirts is $7.68 x 2000 = $15,360, compared to Mike’s $3.47 x 2000 = $6,940. This results in an $8,420 cost difference in favour of Mike’s plan. Production of regular shirts on the other hand are cheaper using Ike’s process, that is Ike’s labour costs are $3.43 x 16,000 (desired quantity of regular shirts) = $54,880 compared with Mike’s labour costs of $3.47 x 16,000 = $55,520. The difference between the two is only $640, which is fairly insignificant, and leaves the total cost difference between the two plans at $7,780 in favour of Mike. The great disparity in cost between the two is mainly due to the efficiency of each proposal. Whilst Mike increases the efficiency of both capacity and labour utilization in the factory (absorbing excess capacity and increasing efficiency from 83% to 93.75% as well as improving labour efficiency by 7.31%), Ike over-utilizes capacity in his regular shirt production line and severely under-utilizes capacity in his custom shirts production line. The result of this is that he has to pay the workers on the regular shirt line overtime whilst the workers on the custom shirt line are frequently starved and