Shirts Case Analysis

Case Analysis

ESC is an apparel industry that wants to improve and expand in the growing market by selling custom made shirts so that the customers can get a shirt of their choice. Dwight said he would sell the shirts at a premium price than the regular shirts just like its competitors. Dwight then decided to ask his two managers Mike and Ike to give their opinions and suggest a change for production process.

ESC currently uses a batch process and we can see that from the flow diagrams in the appendix section. Consider the type of business it is involved in a batch process will always be better than other types of processes like flow process.

In general a batch process usually has a low number of batches in a process being produced. We can see in this case that they are pretty high at 196, 396, 151 for the current, Mike and Ike respectively. Many companies might suffer if the number of batches are low but not in this process.

If they consider to change to the flow process they might have to increase expenses and also might require skilled labor which is something Dwight said he did not want( no large capital expenditures).

Advantages and Disadvantages of Mike and Ike processes

The current process where the regular shirts are made has no setup time required for either Mike or Ike as they use the same in their process too. In Mike's Plan the only setup time is there for the new low ply laser machine whereas Ike needs a full set of operation machines shifted from the old line to the new line for the custom shirts. This puts Mike at an advantage compared to Ike.

If at some point of time the company decides to increase production due to higher demand it will be a problem because only one worker is allotted to each operation and it might lead to problems in the future.

The profit made for regular shirts under retail is about $34 in the current process while the profit made using Mike's plan gives them $.38 and Ike's gives them $.39 higher giving the company negligible differences on profit margin/shirt.

Now coming to custom line shirts I can say that Mike's idea gives the company about $4.2 higher than Ike gets to the company. This means that for 2000 shirts in a month being sold about $8400(4.2*2000) more profit is obtained by Mike's plan than Ike's plan per month.

Ike's plan for the custom line shirts involves moving to a different line from regular shirts. This means that if the company has some extra and empty space no extra cost needs to be incurred, else they have to find a new place and also pay rent or buy the place. If suppose the company decides to drop the production of custom line shirts due to loss of demand then the whole process setup is a waste of time and money. Since the machine is bought by the company to make the custom shirts it will not play a role in deciding whose plan is better. So I feel that Mike has a plus point as he suggested to produce regular and custom line shirts in the same location.

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