A system study on Felicidad Gaita Enterprise

Felicidad Gaita Enterprise (FGE) is a sub-contractor for garments that exports basic and fashion pants as well as shorts to quota countries such as the United States. The company allows a maximum standard of 8% per month of the total volume produced (verified using the data from January to December 1994) for rework, however, they are producing on the average 11% per month which is 3% per month above the maximum for a total cost of P 129,549 for the year 1995. By making the system study in the production area, it was established that the real cause of reworking jeans is due to the limited capacity of the assembly section thus, assigning excess units to the front and back sections in the factory. The proposed solution was to add new machines to the assembly to accommodate arriving units of jeans. Through Monte Carlo simulation, eleven double needle sewing machines will be added to the assembly section. This solution will reduce rework to only 5.23 % per month at the same time minimizing idle time to only 8.27 % in the assembly. This proposed system will cost the company P 385,000 for acquiring the machines, training costs of P 6600 per week, additional labor cost of P 49,764 and factory overhead of P 729.30 per month. On the other hand, since the reworking of jeans will reduce to only 5.23%, the company will be able to save P 68,880 per month. After all costs are deducted, FGE will be gaining P 18,387.12 per month or P 220,645.44 per year. In the same way, there will be also an increase in sales of P 36,434.50 per year. The return on investment will be acquired within 2 years and 2 months. Implementation of this proposed solution will be effective in three months, this includes installing of new machines, hiring, training and orienting or sewers, dry-run and evaluation of the propose system