The Groundhog's New Clothes

While researching the supplier to determine its

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Unformatted text preview: lf shirt. While researching the supplier to determine its reputation and financial viability, Eileen found an article in a trade magazine describing a complaint from environmentalists that Threads of Dignity was releasing an exorbitant amount of pollution into a river bordering its factory. Drake et al. 2004 Georgia Institute of Technology The Groundhog’s New Clothes 4 On September 30, 2004, Beauti-Phil has an ending inventory of 1,500 t-shirts and 2,000 golf shirts. Inventory costs for each month are estimated to be $0.25 per t-shirt and $0.45 per golf shirt applied to the inventory amount left at the end of the month. The Franklins expect to have 2,500 t-shirts and 2,500 golf shirts on hand at the end of March 2005. 4 Personnel Beauti-Phil currently (at the end of September 2004) employs 80 production workers in the factory who are (basically) evenly split between two eight-hour production shifts. The first shift runs between 7:00am and 3:30pm (with a half-hour unpaid lunch break), and the second goes from 3:00pm to 11:30pm. The half-hour overlap allows the one shift to hand off to the other and gives the managers a chance to have weekly meetings with the entire staff at one time. Eileen Franklin estimates that each production worker produces an average of eight shirts (both t-shirts and golf shirts) per hour, but historical data suggests that 2% of the goods produced do not meet Beauti-Phil’s established level of quality and must be scrapped at a total loss. Production workers at Beauti-Phil earn an average hourly wage of $9.50 and receive time and a half (1.5 times the regular hourly wage) for overtime hours. Overtime is limited to two hours per day for each worker (making a maximum 50-hour work week) to ensure that the employees are able to spend enough time with their families. The Franklins have been adamant in the past that they would not fire a good worker, but the loss of the Groundhog Day Festival account and its accompanying drop in demand have forced them to consider layoffs as a possible option to ensure the financial viability of the company. Their workers have made many sacrifices for the Franklins over the years, so they feel that they must offer fired workers a severance package consisting of six w...
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This note was uploaded on 11/19/2013 for the course ISYE 3104 taught by Professor Staff during the Fall '08 term at Georgia Tech.

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