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# 2.We now proceed to compute the operations metrics for Mike’s plan.

In this plan, the new “low ply” laser cutting machine would take 2.5 minutes to
produce 5shirts. One additional worker needs to be hired to operate this
machine. Therefore, the regular shirts labor content = 2.5 / 5 = 0.5 minutes. T
he time taken per shirt = 0.5 minutes Since this is the same as the maximum
time taken for a single sewing process causing the bottleneck (make cuffs), the
cycle time / shirt will remain equal to 0.5 minutes Here the time taken is 2.5 min
/ labor / batch, which forms the bottleneck and represents the cycle time. The
cycle time / shirt = 2.5 / 5 = 0.5 min / shirt. We now proceed to compute the
operations metrics for the current process. T he work-in-process inventory =
Total number of batches in all operations * Batch size= (36 + 288 + 24 + 24 +
24) * 5= 396 * 5 = 1980 shirts
Now we can apply Little’s Law to calculate the throughput time which is equal to
the
manufacturing lead time in this case. By Little’s Law,
Throughput time = Work-in-process / Throughput rate = Work-in-process *
Cycle time= 1980 * 0.5= 990 minutes Since production goes on for 8 hrs per day,
manufacturing lead time = 990 / (8 * 60)= 2.06 days Total number of shirts
produced per month is 16000 + 2000 = 18000. The company works for 20days a
month. So, the output per day = 18000 / 20 = 900 shirts. In, 8 hours a day, the
company can produce 60 * 8 * (1/0.5) = 960 shirts, which is the current
production capacity. But it needs to produce only 900 shirts. So, the capacity
utilization = (900 / 960) * 100 = 93.75%For calculating the direct labor content,
we have to find out the direct labor content values for sewing and cutting
separately. For sewing operations, the DLC = 25.51 minutes/shirt For the
cutting operation, since both the new and old machines are used, the weighted
average of the individual DLCs are considered DLC for cutting = (No of custom-
made shirts * Time taken for each custom-made shirt +No of regular shirts *
Time taken for each regular shirt) / Total no of shirts= (100 * 0.5 + 800 * 0.25)
/ 900 = 0.28 minutes Therefore, total direct labor content = 25.51 + 0.28 =
25.79 minutes The actual labor utilized = Number of shirts produced * Direct
labor content= 900 * 25.79= 23211 minutes The available labor for utilization =
Total number of workers * Hours per day * 60= 65 * 8 * 60

= 31200 minutes Therefore, the direct labor utilization = (23211 / 31200) * 100
= 74.39%Direct labor cost (\$/shirt) =
= (65 * 8 * 6) / 900 = 3.47
Let us now evaluate Ike’s plan
.
For the regular shirts,
the direct labor content will be the same as in the current process as here the
new cutting machine is kept separate from the regular shirt manufacturing
process. Therefore, the direct labor content = 25.76 minutes/shirt for regular
shirts Here, however the number of workers in each process is reduced by one.
Therefore, the cycle time may change.
Operation Regular Shirts Labor Content (minutes per shirt)Number of
workers Time taken per shirt(minutes) Time taken per batch(minutes)
Therefore, the maximum cycle time = 0.67 minutes Similar to the previous
plans, the work-in-process inventory = (16 + 108 + 9 + 9 + 9) * 60= 9060 shirts

Similar to the other plans, we can calculate the manufacturing lead time= (9060
* 0.67) / (8 * 60) = 12. 58 days Production capacity = 480 minutes / 0.67
minutes/shirt = 720 shirts Actual production of regular shirts = 800Therefore,
capacity utilization = (800 / 720) * 100 = 111.11%Direct labor utilization = (800 *
25.76) / (49 * 8 * 60) = 20608 / 23520 = 0.8762For calculating the direct labor
cost, since there is overutilization of capacity, we need to consider the
overtime cost also. Overtime = 1.1111 * 8

8 = 0.8888 hours/day Normal time = 8 hours/day Therefore, total labor cost
per day = 0.8888 * 9 + 8 * 6The direct labor cost/shirt = (0.8888 * 9 + 8 * 6) /
800 = \$ 3.43