Cost Reduction Using Lp
Autor: pop3asd • July 27, 2016 • Study Guide • 1,081 Words (5 Pages) • 726 Views
1. All processes are sequential processes
2. We are cutting at capacity (60 pcs/hour)
3. We are calculating WIP and Lead time based on the capacity.(Industry Standards)
4. Utilization and efficiency are different parameter
5. Overtime is based on the capacity of 90 pieces per hour, total overtime is 18 hours spread across the month
6. Indirect labor (material handler) and supervisor are common and therefore their costs are divided in the ratio of standard and custom shirts produced every month
7. Shirts will be sold at wholesale price to calculate profitability
8. For Mike’s method, the cost for custom shirt is calculated by subtracting per unit of cutting labor cost from regular shirt and vice versa
9. All calculations are shown in the attached excel.
1. All processes are sequential processes
2. We are cutting at capacity (60 pcs/hour)
3. We are calculating WIP and Lead time based on the capacity.(Industry Standards)
4. Utilization and efficiency are different parameter
5. Overtime is based on the capacity of 90 pieces per hour, total overtime is 18 hours spread across the month
6. Indirect labor (material handler) and supervisor are common and therefore their costs are divided in the ratio of standard and custom shirts produced every month
7. Shirts will be sold at wholesale price to calculate profitability
8. For Mike’s method, the cost for custom shirt is calculated by subtracting per unit of cutting labor cost from regular shirt and vice versa
9. All calculations are shown in the attached excel.
1. All processes are sequential processes
2. We are cutting at capacity (60 pcs/hour)
3. We are calculating WIP and Lead time based on the capacity.(Industry Standards)
4. Utilization and efficiency are different parameter
5. Overtime is based on the capacity of 90 pieces per hour, total overtime is 18 hours spread across the month
6. Indirect labor (material handler) and supervisor are common and therefore their costs are divided in the ratio of standard and custom shirts produced every month
7. Shirts will be sold at wholesale price to calculate profitability
8. For Mike’s method,
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