Sportswear Case Study

Sportswear Case Study

Memorandum

From: ABC

To: XYZ Ltd

Subject: Sportswear Case Study

Date: October 21, 2007

Introduction

The Apparel industry had the high growth in the 1980’s and later in nineties there were many players in the industry which increased the competition. Sportswear Company performs the assembly operations and supplies to the apparel manufacturers. Profits and sales revenue of the company are very high even after facing the recession in the economy. Later it is discussed whether company is worthwhile to be purchased by the apparel manufacturers.

To produce composite intermediary component, components are put together which is known as the assembly process. In the Sportswear all the women’s products have the same assembly process and the time is decided by the company Foxtrot, whom its supplies. In the first stage, through the exclusive equipment belt loops are attached to the cloth. In all it take five seconds to complete the task from placing and removing the piece. The next task is pressing and serging after looping the garment in which equipment for serging is capable to process six numbers of units in one minute.

Three operations looping, pressing and serging is accomplished by a single worker. Bundling is performed carefully to make certain about the pieces and color. Sewers assemble the bundles and then button are placed through machines. Final pressing is done then to the units. In the last, prices are attached and examination is performed for quality checking by a single operator. Packing of the garments is in clear plastic coverings and of defective products blue plastic is used. This took the maximum time, of two minutes for one unit and the two people work in this operation. It is a continuous process in which after completion of one job, next is performed. In each task of the process, value is added to the garment.

To increase the orders, process should be modified from performing continuous operations as next operation can only be performed when the earlier operation is completed and it consumes much time. One worker performs three operations; it has to be changed to reduce the time taken in the operation. To handle the increase in orders more workers have to be employed. In the packaging all the items whether that have passed examination or the defective items they are packaged, it takes two minutes. Defective items should not be packed as it consumes much time.

Company has made profits of $500000 in the year 1994; it is a huge amount as there is intense competition. It has the sales of $468000 and expenses on labor, material and payments of rent. Its contribution is high which $97760 is after deducting the variable costs. Profit is approximately 54% of the contribution (Contribution = sales-material costs, direct labor, and foreman salary). It is a large amount of the sales revenue. Fixed cost of the Sportswear is low as compared to the industry.

Fixed cost also includes high amount of maintenance cost which is cost-effective and advantageous for the company in the