(Theory of Constraints) Jolly Inc. makes men’s work shirts in two divisions: cutting and assembly. The Cutting Department is highly automated and the Assembly Department uses manual labour to sew the shirts. The Assembly Department is limited by the number of labour-hours available. The company has had to slow down the cutting process so that the sewers do not become overwhelmed by the amount of cut fabric entering the Assembly Department. Further, demand has increased to 10,000 shirts per month and management is considering adding another sewer to the Assembly Department or having the existing sewers work overtime 1.5 hours per day at an overtime rate of one and half times their regular pay. The cost of each sewer is $12 per hour, averaging 8 hours per day and 20 days per month. Currently, the company has 5 sewers and makes 10 shirts per day.
- What is the total production that the company could make in a month if it hired a new sewer?
- What is the total production that the company could make in a month if it had the staff work an additional 1.5 hours per day?
- What is the overall cost difference between hiring a new sewer and having employees work extra time? Should the company hire a new sewer or pay existing sewers overtime to provide the capacity needed?
- What other factors would need to be considered when deciding which approach to take?