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1.StraightLineSystem

I.ApparelManufacturing
1.2 Production Operations in Apparel Manufacturing: The following are the operations

This was a very successful and popular mass production system in the 50s but not so today.

involvedintheproductionofgarmentsinanapparelmanufacturingfirm.

Here,theproductionunitissinglegarment,assembledinsequenceandpassesfromoperation

Patterndevelopment,grading,layplanning

to operation. The layout planned and chutes are custom made with operator seated

Stockroomfabricandtrimmings

behind/oppositetothenextone.Workfedbygravitychutesorpushingalongbench,conveyor

Cuttingspreading,cuttingandbundling

canbeused.Alloperationstakesametimetocomplete.Eachoperatormakessameamountof

Sewingprefabrication,assembly,finishing

money determined by output at end of the line. The pictures shown here below show the

Pressingironing,pressing,steaming

different

types

of

layout

for

this

system.

Inspectioninitial,finalandaudit
Warehousepacking,shipping

ProcessSequenceofApparelManufacturing
1.2.1TypesofGarmentProductionSystems:
Thewayin which the inputresources of theproduction(suchasmen, materials,machinesand
materialhandling)isorganizedandarrangedisknownasproductionsystem.Sofar,therearefive

typesofproductionsystemsusedinapparelindustry:

AdvantagesofStraightLineSystem:

Technologyenabled Manufacturing Systems: Following are the different types of garment

Lowlevelofworkinprogressisaccumulated.

productionsystemsusedinthegarmentindustry.

Throughputtimecanbeaslittleasthelabourcontent.

1.StraightLineSystem2.ConventionalBundleSystem3.ProgressiveBundleSystem

Nobacktrackingofmaterialadlessmaterialhandlingtime

4.UnitProductionSystem5.ModularManufacturingSystem

Smallspaceisrequiredforeachoperator

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Shadingcontrolisextremelyeasy

Throughputtimeislengtheningtoamonthormore.

PartII

Disadvantages:

Evenaminorproductchangecannotbeaccommodated

Qualityproblemseasilyaccumulate.

Machinebreakdowncanbecriticalandtroublesome.

specializationandworkplaceengineeringisdifficult.

Preproductionplanningskillisessential.

Thelineispacedbytheslowestoperation.

Applications:
Productionofsimplegarmentse.g.underwear

Productioncontinuesforlengthyperiods,say8weeksormore

Materialhandlingtimeisspentsubstantially

2.ConventionalBundleSystem
Itisacommonlyusedsystemofmassproductioninthe60s.Theproductionunitisabundleof
cut parts to be assembled into certain number of garments. Specific quantity of parts in the
bundleisdeterminedbynumberoffabricpliesandweightofbundle.
Theoperatorreceivesbundlefromcentralstore,untiesbundle,performthesewing,cutsticket
andretiesbundle.Shethenreturnsbundlebacktostorewhereitwaitsuntilthenextoperation
and the process repeats until the garment is completed. Operators of specialised skills are
independentlyworkingatownpaceandpaidbypiecerates.
Advantages:
Absenteeismdoesnotcausemanyproblems.
Preproductionplanningisnotcritical.
Operatorsareencouragedtoworkasfastasshecan.
Thesystemrewardsahighindividualproductivity.
Uniformlevelofqualitycanbeachieved.
Applications:

Ordersinlowtomediumvolume.

3.ProgressiveBundleSystem

Conventionalstyleofproductionwithlessmanagerialskills

Thiswaswidelyusedsysteminthe70s.Theengineeredoperationsarelaidoutinsequence.

Disadvantages:

Eachoperatordoesherbundleandpassesitdirectlytothenextoperators,asthegarmentsare

VeryhighlevelofWIP(workinprogress)isrequired.

graduallyassembledastheyflowsequentiallyinbundleform.Ifbundletruck/clumptruckused,

AstorageareaisneededtoholdWIPthatisnoteasytocontrol.

bundle tying is often not required. Interprocess bundles are temporarily stored in between

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neighboured operations. The amount of machinery for each operation is determined by the
outputrequired.

Advantages:

Thelineiseasiertobalanceandcontrol.
Uniformqualitycanbeensuredbyinprocesscontrol.
Semiskilledlabourrequireslesstrainingtimeandcost.
Individualperformancescanbemonitoredbyincentives.

Disadvantages:
Highinvestmentonmachinecost.
Shortrunproductionisnotadaptable.
HighlevelofWIPextendsthroughput
time.

Applications:
Complicatedmanagementskillis
required.

Basicgarmentswithlittlechange.
Lengthyproductionrunsonthesamestyle
4.UnitProductionSystem

This was a major advance made in the 80s when computers were used to plan, control and
directtheworkflowthroughthesystem.

The production unit is a single garment. All parts of a garment unit are clamped by a carrier
which automatically transports from station to station along the overhead transportation
system.Theworkstationsaresodesignedthatthecomponentsarepresentedattheearliest
positionforhandling.Manyoperationscanbeperformedwithoutremovingtheworkfromthe
carrier. After sewing, disposal is automatic as the operator presses a button and the carrier
progressestothenextoperationaccordingtoapredeterminedsequence.

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Advantages:

Disadvantages:

withoperatorsstandingattheirworkstationsandrotatetodifferentmachinesastheywork.It

Bundlehandlingandmatchingiscompletelyeliminated.

Highinvestmentperworkstation
(US$45k).

can assemble an entire garment or subassembly of more complex product. Arrangement

DramaticreductionsinWIPandthroughputtime.
Repairstendtobelowerandrepairtrackingiseasy.
Workingconditionisimproved.
Computersautomaticallycontroltheworkflowandbalancing
Manystylescanbeproducedsimultaneouslyononesystem.
Applications:
Fashionedgarmentswithquickresponse.
Orderswithlowtomediumvolume.

Itsfixedphysicalconfiguration
takesuplargespace.

teamworkandimprovingmorale,itenhancesqualityandreducesworkerturnover.
LayoutisusuallyinaUshapewithmoreworkplacesthanoperators.Operatorsmovebetween
operationswithinmodulewheneverextraWIPexists.Teamispaidasagroupforworkquantity

Highmaintenancecostand
operatingcost.

andquality,oratimebasisinsteadofthetraditionalpieceworksystem.
Time spent per garment is also little; e.g. Tshirt 3 mins, Pullon pants 6 mins., unstructured

Preproductionplanningis
essential.

jacket25mins.,linedblazer40mins.,tailoredcoat120mins.
Advantages:

Frequentjobchangingfor
balancingisrequired

follows a logical operation breakdown. The team inspects its own work, besides inspiring

LowerlevelofWIPfreesupcapitaltiedupandfloorspace.
Fastthroughputtimeenablesquickresponseandpromptdelivery.

Qualitybecomesateamresponsibilityandmonitoredatsource.
Peerpressureencouragesateamspiritanddiscouragesabsenteeism.
Thesystemishighlyflexiblewithstylechanges.
Disadvantages:
Trainingtimeandcostisincreased.
Itrequiresconsiderablechangesinmanagementphilosophy.
specialisedequipmentispoorlyutilized.
Operatorscannotdeveloptherhythmandpaceofhighperformance.
Individualeffortisdifficulttorecognisewithinthegroup.
Applications:
Fashionedgarmentswithquickresponse.
Orderswithlowvolumeandfrequentchanges.
Companywithmutualtrustbetweenmanagementandoperators

Acomparisonbetweenthesetwoproductionsystemshasbeendrawninthefollowingtableon
the basis of production KPIs (Key Performance Indicators) to show how an UPS system

TypicalLayoutofaUnitProductionSystem.

(overheadhangingandsensorcontrolledsystem)ismosteffectiveoverPBS.

5.ModularManufacturingSystem
This system is used successfully in Japan, Europe and US since 90s. Groups operators into
teamsormodulesof517crossedtrainedoperators.Theteamworksononegarmentatatime

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garmentcomponents.
WIPlevel

In PBS generally operators are asked to Less WIP in between operators. As

sew as much pieces as they can without workstation has limit of holding no. of
considering back and front operators. This hangers.

Also

after

completion

of

resultedpilingupofworkintheoperations operation hangers are transported to the

withhigherworkcontent.

nextoperationautomatically.

Cuttingwork

AsaresultofHighWorkInProcess(WIP)is LowerWIPresultsinlesscuttingworks.A

requirement

requiredbysewingsection,cuttingsections balanced flow of material established in

arerequiredtoperform6070%morethan betweencuttingandsewingline.
actualproductioncanhandle.

InventoryLevel

Due high WIP and higher cutting, fabrics Lessinventoryforfabricandtrims.

andtrimsneedtostockinadvance

ATypicalLayoutofamodularmanufacturingsystem

Excesslabour

Usually in PBS needs more overtime PlantwithUPSsystemneedslessovertime

requirement

works,repairworkduetosomeunfinished as planning is easy in this manufacturing

operations.

Parameters
Transportation

ProgressiveBundleSystem(PBS)

UnitProductionSystem(UPS)

Manualtransportation,manytimeshelper In this system an automated mechanical

system.
LayoutofaModularManufacturingsystem

arehiredforthisbundletransportationjob. system carries pieces to each work

Operatorsstoptheirworktofetchbundles. stations.
Less effective in terms of production
management.Resultedlongresponsetime. Easier pick up and dispose at each work
station.Resultedquickresponsetime
Through
time

put Compare to UPS, through put time longer Through put time in UPS is less compare
in PBS. How much long will depend on the toPBS.Butitisnottheminimumtimeasin
bundle size and no. of bundles kept in this system there is WIP in between two
betweentwooperators.

Direct

operators.

Labour Direct labour content is high because Direct labour content is less than PBS

content

usually operator does tying and untying of because an operator only sews the
bundles, positioning components, pulling garment part rather than other tasks. In
the bundle ticket and handling of work this system garment parts are held by the
pieces.

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II.QualityanditsCostsintheApparelIndustry

vii.Flow chart: A technique that separates data gathered from a variety of sources so that

Thetermtotalqualitymanagement(TQM)hasbecomeabuzzwordnowadays.It

patternscanbeseen.

refers to organization wide effort to achieve quality. It can accurately be described as a

1.Causeandeffectdiagram:ItisalsocalledtheCauseandEffectDiagram,IshikawaDiagram.

philosophyaboutqualitythatsuggestforinvolvingeveryoneintheorganizationinaquestfor

It identifies many possible causes for an effect or problem. It can be used to structure a

quality.Itextendstosuppliersaswellastocustomers.Iffact,inTQM,thecustomeristhefocal

brainstormingsession.Itimmediatelysortsideasintousefulcategories.Itisusedforidentifying

point, as the business is driven by customers. As such, customers satisfaction is the main

possiblecausesforaproblemand/orespeciallywhenateamsthinkingtendstofallintoarut.

drivingforce.Everyoneintheorganization,formthetopmostchiefexecutive,uptothebottom

These causes could be related to the machines, workers, measurement, suppliers, materials,

most workers, has to take part in this endeavor. A manufacturing company that possesses

and many other aspects of the production process. For example, a problem with machines

manycomplexitiescanbehighlychallengedwhenmaintainingproductiongoalsandstandards

couldbeduetoaneedforadjustment,oldequipment,ortoolingproblems.Similarly,a

in conjunction with a major organizational change. Garment manufacturing is a complex

problemwithworkerscouldberelatedtolackoftraining,poorsupervision,orfatigue.

industry for many reasons. The product line is a complexarray of styles, seasons, varying life

Theprocedureforthisdiagramis

cycles, and multidimensional sizing. Many sewn product firms are viewing TQM as the
appropriate strategy tomeetthedoubledemandof competitionandquality;however, many

1. Agree on a problem statement (effect). Write it at the center right of the flipchart or

companiesare findingsustainingtheirTQMadoptiondecisionverydifficult.

whiteboard.Drawaboxarounditanddrawahorizontalarrowrunningtoit.

These are the most fundamental quality control (QC) tools. They were first emphasized by

2.Brainstormthemajorcategoriesofcausesoftheproblem.Canusegenericheadings:

KaoruIshikawa,professorofengineeringatTokyoUniversityandthefatherofqualitycircles.
i.Causeandeffect diagram: (also called Ishikawa or fishbone chart): Identifies many possible

1.Methods2.Materials

3.Machines (equipment) 4.Measurement 5.People (manpower)

6.Environment

causesforaneffectorproblemandsortsideasintousefulcategories.
ii.Check sheet: A structured, prepared form for collecting and analyzing data; a generic tool
thatcanbeadaptedforawidevarietyofpurposes.
iii.Controlcharts:Graphsusedtostudyhowaprocesschangesovertime.
iv.Histogram: The most commonly used graph for showing frequency distributions, or how
ofteneachdifferentvalueinasetofdataoccurs.
v.Paretochart:Showsonabargraphwhichfactorsaremoresignificant.
vi.Scatter diagram: Graphs pairs of numerical data, one variable on each axis, to look for a
relationship.

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Thisfishbonediagramwasdrawnbyamanufacturingteamtotrytounderstandthesourceofa

4.Labelallspacesontheform.

spotinthegarment.Theteamusedthesixgenericheadingstopromptideas.

PartII

5.Testthechecksheetforashorttrialperiodtobesureitcollectstheappropriatedataandis

2.CheckSheet:Itisalsoknownasdefectconcentrationdiagram.Achecksheetisastructured,
preparedformforcollectingandanalyzingdata.Thisisagenerictoolthatcanbeadaptedfora

easytouse.
6.Eachtimethetargetedeventorproblemoccurs,recorddataonthechecksheet.

wide variety of purposes. The check sheet also called a Defect Concentration Diagram is
basically a data collection sheet [1]. By using check sheet we have collect the frequency of

3. Control Chart: It is also called: statistical process control chart. Different types of control

defect. It can be observed and analyzed that all the defects do not occur in same frequency,

charts can be used, depending upon the type of data. The two broadest groupings are for

somedefectsappearveryfrequentlyandsomearelessfrequent.

variabledataandattributedata.

Variabledataaremeasuredonacontinuousscale.Forexample:time,weight,distance
ortemperaturecanbemeasuredinfractionsordecimals.Thepossibilityofmeasuring
togreaterprecisiondefinesvariabledata.

Attributedataarecountedandcannothavefractionsordecimals.Attributedataarise
when you are determining only the presence or absence of something: success or
failure, accept or reject, correct or not correct. For example, a report can have four
errorsorfiveerrors,butitcannothavefourandahalferrors.

Variablescharts

XandRchart(alsocalledaveragesandrangechart)

Xandschart

1.Datacanbeobservedandcollectedrepeatedlybythesamepersonoratthesamelocation.

chartofindividuals(alsocalledXchart,XRchart,IXMRchart,XmRchart,movingrange
chart)

2. When collecting data on the frequency or patterns of events, problems, defects, defect

movingaveragemovingrangechart(alsocalledMAMRchart)

location,defectcauses,etc.

Attributescharts

3.Whencollectingdatafromaproductionprocess.
Procedure:1.Decidewhateventorproblemwillbeobserved.Developoperationaldefinitions.

pchart(alsocalledproportionchart)

2.Decidewhendatawillbecollectedandforhowlong.

npchart

3.Designtheform.SetitupsothatdatacanberecordedsimplybymakingcheckmarksorXs

cchart(alsocalledcountchart)

orsimilarsymbolsandsothatdatadonothavetoberecopiedforanalysis.

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5.ParetoChart:AParetochartisabargraph.Thelengthsofthebarsrepresentfrequencyor

uchart

4. Histogram: A frequency distribution shows how often each different value in a set of data
occurs.Ahistogramisthemostcommonlyusedgraphtoshowfrequencydistributions.Itlooks
verymuchlikeabarchart,butthereareimportantdifferencesbetweenthem.Itisused

cost (time or money), and are arranged with longest bars on the left and the shortest to the
right.Inthiswaythechartvisuallydepictswhichsituationsaremoresignificant.Paretochart,
also known as Pareto analysis is a statistical technique in decision making that is used for
selectionofalimitednumberoftasksthatproducesignificantoveralleffect.ItusesthePareto

Whenthedataarenumerical.

principletheideathatbydoing20%ofwork,80%oftheadvantageofdoingtheentirejobcan

When you want to see the shape of the datas distribution, especially when determining

be generated. Or in terms of quality improvement, a large majority of problems (80%) are

producedbyafewkeycauses(20%).Allthedatacollectedbychecksheethasbeenplottedin

whethertheoutputofaprocessisdistributedapproximatelynormally.

Paretochartandfoundthe20%defectsthatcausesof80%problems.The20%defectsareSkip
Whenanalyzingwhetheraprocesscanmeetthecustomersrequirements.

Stitch,DirtySpot,OilSpot,OpenSeam,Pleat,Rawedge,uncutthreadetc.

Whenanalyzingwhattheoutputfromasuppliersprocesslookslike.

Whenseeingwhetheraprocesschangehasoccurredfromonetimeperiodtoanother.

Whendeterminingwhethertheoutputsoftwoormoreprocessesaredifferent.

Whenyouwishtocommunicatethedistributionofdataquicklyandeasilytoothers.

Analysis:Beforedrawinganyconclusionsfromyourhistogram,satisfyyourselfthattheprocess

wasoperatingnormallyduringthetimeperiodbeingstudied.Ifanyunusualeventsaffectedthe
processduringthetimeperiodofthehistogram,youranalysisofthehistogramshapeprobably
cannotbegeneralizedtoalltimeperiods.Analyzethemeaningofyourhistogramsshape.

Normal.Acommonpatternisthebellshapedcurveknownasthenormaldistribution.Ina

6. Scatter Diagram: (scatter plot, XY graph): The scatter diagram graphs pairs of numerical

normaldistribution,pointsareaslikelytooccurononesideoftheaverageasontheother.Be

data,withonevariableoneachaxis,tolookforarelationshipbetweenthem.Ifthevariables

aware, however, that other distributions look similar to the normal distribution. Statistical

arecorrelated,thepointswillfallalongalineorcurve.Thebetterthecorrelation,thetighter

calculationsmustbeusedtoproveanormaldistribution.

thepointswillhugtheline.

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Quality:Qualityisconformancetospecificationsfromthesupplierpointofviewandfitnessfor
usefromthecustomerpointofview.Thereareanumberoffactorsonwhichqualityfitnessof
garment industry is based such as Performance, Reliability, Durability, Visual and Perceived
qualityofthegarment.Qualityneedstobedefinedintermsofaparticularframeworkofcost.
Qualityrelatedcostscanbeashighas25%ofsales.Onefourthofthepeopleemployeddonot
produce but redo and reinspect & reredo. Quality costs are greater than gross profit. In
worldclasscompaniesthesecostscanbebroughtdownto2.5%.Thefigurebelowshowsboth
thevisibleandinvisiblecostsofquality.

7.FlowChart:Processflowchartisagraphicaltoolthatshowsthemajorstepsinprocess.Flow
chartsareusefultoolforexamininghowvariousstepsarerelatedtoeachother.Bystudying
this chart individuals and teams can often uncover potential sources of trouble and identify
steps to be taken to improve or make it errorproof a process. The process flow chart for
cuttingprocessingarmentmanufactureisgiveninthefigureherebelow.

The ASQC Quality Cost Committee (5) recommends breaking down quality costs into the

followingfourareas.

1.PreventionCost:Thecostassociatedwithpersonnelengagedindesigning,implementing

and maintaining the quality system. Maintaining the quality system includes auditing the
system.

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2. Appraisal Costs: The costs associated with the measuring, evaluating or auditing of
products,componentsandpurchasedmaterialstoassureconformancewithqualitystandards
andperformancerequirements.

3. Internal Failure Cost: The costs associated with defective products, components and
materialsthatfailtomeetqualityrequirementsandresultinmanufacturinglosses.

The graph in the previous page shows the interrelationship between the quality costs. The
followingchartshowstherelationshipbetweenthequalityandprofitability.

Quality & Profitability

IMPROVED
CONFORMANCE

4. External Failure Costs: The costs generated when defective products are shipped to
customers.
BETTER OUTGOING
QUALITY

LOWER REWORK
AND SECONDS
COSTS

LOWER PRODUCTION
COSTS

LOWER COSTS OF
RETURNS

INCREASED
PRODUCTIVITY

INCREASED PROFITS

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III.ErgonomicsintheTextileandApparelIndustries

4.TasksAssociatedWithInjuriesandIllnesses

1.Introduction:

1. Handsewingandtrimmingarestressfultoallupperlimbs

Theclothingindustryisgenerallyseenasasafeplacetowork.Comparedtootherindustries,
therearerelativelyfewseriousaccidentsinclothingplants.Thehazardswefacearedifferent.
Themajorhealthrisksinthisindustrydonotarisefromimmediate,potentiallyfatalhazards.
Instead, the risks that clothing workers face come from more subtle hazards whose effect
accumulatesovertime.

2. Stitchingtasksareassociatedwithpainintheshoulders,wrists,andhands
3. Ironingbyhandisassociatedwithelbowpain
4. Garmentassemblytasksareassociatedwithctdsofthehandsandwrists
5. Footoperatedsewingisassociatedwithpainintheback
5.StaticPosturesandCTDs

Thechallengesfacingthegarmentindustrytoday:

Analysisrevealsthat40%ofoperatorsatsewingmachinesstoopforward>20othroughoutthe
machinecycle

1. Stiffcompetitionfromoverseascompanieswithaccesstoinexpensivelabour
2. ShortageofavailableskilledEthiopianworkers

60%tilttheirheadsforward>20othroughoutthemachinecyclewhy?

3. Annualturnoverratesrangingfrom30%toover100%
4. Learningcurvesofseveralmonthstoattainneededskilllevelsformanyjobs

i.

visualdemandsofthework

5. Difficultyinapplyingmodernautomationtechnologiestofabricsprocessing

ii.

geometryoftheworkstation

iii.

inadequateseating

2.Ergonomics
Ergonomics is a sciencethat focuses on designing a job for the worker. Improving ergonomic

6.PosturalStressandLighting

conditions of the garment factory can improve productivity and safety and this will enhance

i.

precisestitchingtasksarevisuallydemanding

competitiveness. It will also reduceworkers compensation costs. It will provide more reliable

ii.

threadandfabricoftenofferlittleornovisualcontrast

workforce. It may include allocating high risk jobs to machines where possible (they will be

iii.

36%ofoperatorsfeellightingisinadequate

goingoverseasanyway).

iv.

surveysfoundlightlevelsatlessthan60%ofrecommendedlevels

v.

operatorsleanforwardtoseetheirwork

3.InjuriesandIllnessesAmongTextileandApparelWorkers

7.Seating

70%ofsewingmachineoperatorsusingfootcontrolsreportbackpain
35%reportpersistentlowbackpain
25%havesufferedacompensableCumulativeTraumaDisorder(CTD)
81%ofctdsweretothewrist
14%ofctdstotheelbow
5%ofctdstotheshoulder

i.

straightbackedwoodenormetalchairsaretypicalintheindustry

ii.

chairsoftenlackcushioning

iii.

chairsoftenlackadjustablebackrests

iv.

chairsoftenlackheightadjustability

v.

improvedseatingisreadilyavailable

8.PsychosocialConsiderations

49%ofworkersexperiencepainintheneck
The absenteeism among the workers increases as working conditions worsen. The loss of

i.

psychomotordemandsarehigh(speed,accuracy,coordination)

ii.

positiveattitudestowardworkareinverselyrelatedtoincreasedmonotonyandfatigue

workersduetoinjuriesorturnoverisassociatedwithworkingconditions

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iii.

positiveattitudestowardworkaredirectlyrelatedtojobsatisfaction

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13.WorkEnhancements

9.WorkOrganization
i.

asmanyas100%ofpieceworkoperatorsinhighmanipulationjobshavesymptomsof
ctds

ii.

workers in piecework are 4 times as likely to develop severe disabilities as hourly

workers

iii.

workers in piecework are 9 times as likely to develop arthritic and osteoarticular

disordersashourlyworkers

i.

asdurationofemploymentinpieceworkincreases,sodoesseveredisabilities

ii.

machineoperatorsexperiencecumulativedamagetotheneckandshouldersovertime

iii.

risk for persistent neck and shoulder pain increases with years of employment as a
machineoperator

iv.

i.

foampaddededgestosharptableedges

ii.

provideclothupholsteredadjustablechairs

iii.

anglepackingboxestoworkerswithtiltequipment

iv.

provideantifatiguemattingforstandingworkers

v.

improvedlighting

vi.

requirerestperiods

vii.

jobrotations

14.AutomatedMaterialsHandling

10.DurationofExposure

work for more than eight years as machine operator increases risks for neck and

11.SolutionsAComprehensiveErgonomicsProgram
i.

trainingforsupervisorsandmanagers

ii.

awarenesstrainingforemployees

iii.

jobanalysesandimplementationofcontrols

iv.

workerinvolvementandparticipation

v.

medicalmanagement

i.

eliminatesheavyliftingbyoperatorsorbundleboys

ii.

usespreprogrammedhangingconveyor

iii.

movesonlyoneorafewworkpiecesperhanger

iv.

computercontrolledmovementtrackedbybarcodedhangersandseriesofscanners

v.

deliversworktoqueuenearoperator

vi.

Strongonpreprogrammedusebutweakonflexibility(shorttermchanges,etc.)

vii.

technologyisrapidlyimproving

viii.

futuremodelswilldirectmoreworktothequeuesofthemostproductiveworkersand

shoulderpain

lesstoslowerworkersorbeginners
15.ModularManufacturingConcept
i.

conventionaltextile/apparelindustriesusetheprogressivebundlesystemeach

ii.

inmodularmfg.acompletegarmentisproducedinamodularcell

iii.

cellsmayhave10operatorsand20machines
operatorsarenotassignedtoasingleoperationbutmovebetweenworkstations

operatorisassignedtoasingleoperation

12.WorkStationRedesignSewingMachines
i.

30fixedtabletopheight

iv.

ii.

pointofoperationbetween47abovetabletop

v.

Teamsofoperatorsareresponsibleforworkplanningandmanagement,product
quality,etc.

iii.

sewingmachinetilted11otowardoperator

iv.

forjobsoflongerdurationsewingbenchmountedarmrests

vi.

employeesareempoweredboostsmorale

v.

adjustablechair

vii.

avarietyofmotionsareusedbyeachoperatorreducesriskforCTDsandrelievesstatic

vi.

adjustablefootrestwithmovablemachinecontrol

postures
viii.

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ix.

significantlyreducedabsenteeism

product.Iftheproductcostsarenotallocatedaccurately,thegrossprofitforeachproductwill

x.

necessitatesbetterergonomicdesignsofworkstationstoaccommodatedifferent

beincorrect,andmanagementmaysetinappropriatesellingprices.

operators

PlantwideOverheadRateMethod

xi.

manyoperationsconvertedtostandingworkstationsinsteadofseatedworkstations

xii.

employeespaidonagroupincentivesystem

Theplantwideoverheadratemethodispracticalwhen(1)overheadcostsarecloselyrelated
toproductionvolume,or(2)acompanyproducesonlyoneproduct.Theplantwidemethodis

IV.ACTIVITYBASEDCOSTINGANDANALYSIS

appliedasfollows:

Background

1. Totalbudgetedoverheadcostsarecombinedintooneoverheadcostpool.

Activity based costing is about assigning overhead costs. In costing, we learned that product

2. Next,thecostpoolisdividedbythechosenallocationbase,suchastotaldirect
laborhours,toarriveatasingleplantwideallocationrate.

costsconsistofdirectmaterials,directlabor,andfactoryoverhead.Wealsounderstoodthat

3.Finally,thisrateisappliedtoassigncoststoallproducts.

direct materials are assigned to product costs via the materials requisition form, and direct
laborisallocatedtoproductcostsusingtimetickets.Directmaterialanddirectlaborcostsare

Theadvantagesofusingtheplantwideoverheadratemethodare:

easilytraceabletothesesourcedocuments,soaccuracyinassigningthesecostsisnotdifficult

Theinformationnecessaryisreadilyavailable

toachieve.

Itsimplementationissimple

However,factoryoverheadcannotbeallocatedtoproductsusingsourcedocuments.Wemust

Itissufficienttomeetfinancialaccountingrequirements.

use an allocation system to assign overhead costs, such as factory maintenance and factory

However,foracompanythatmakesmorethanoneproduct,orwhosefactoryoverheadcosts

supervisorssalaries,toproducts.

are not related to production volume, the plantwide overhead rate method is the least

Asfactoriesbecomemoreandmoremechanized,factoryoverheadbecomesalargerportionof
product costs. As a result, assigning factory overhead to individual products manufactured
becomesmoreimportant.Thischapterintroducesthreemethodsofallocatingoverhead:

accurate and may result in over or underassignment of factory overhead costs to individual
products. This is known as product cost distortion. Product cost distortion can lead to
inappropriatesellingpricesanddecreasedcompanyprofitability.
DepartmentalOverheadRateMethod

1. Thesingleplantwideoverheadratemethod

Thedepartmentaloverheadratemethodresultsinabetterallocationoffactoryoverheadcosts

2. Thedepartmentaloverheadratemethod

todepartmentswhenoverheadresourcesareconsumedinsubstantiallydifferentways.

3. Theactivitybasedcosting(ABC)method.

Itscalculationsinvolvetwostages:

Whyisthisimportant?

1. Firststageoverheadcostsaredeterminedseparatelyforeachproduction

Most companies produce more than one product. An important managerial accounting

department.

function is to accurately allocate direct materials, direct labor, and factory overhead costs to

2. Second stageeach department determines an allocation base, such as

eachproductsothatthecostofeachproductisavailable.Managementcanthendeterminethe

machine hours or direct labor hours. An overhead rate is then computed

gross profit per product, and use this cost data to set appropriate selling prices for each

for each production department. This overhead rate is used to allocate

factoryoverheadcoststoproductspassingthroughthatdepartment.

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B. Step 2: Trace overhead costs to cost pools. Look for costs that are caused by the
same activities within each activity level. Pool costs that are related to the same

Whilethedepartmentaloverheadratemethodismoreaccuratethantheplantwideoverhead

driver.

rate method, it has limitations that may result in product cost distortions. Different
products within the department may differ in batch size and complexity. Additionally,

C. Step3:Determineactivityrate.Properdeterminationofactivityratesdependson

significantoverheadcostssuchasmachinesetupcostsandengineeringmodificationsmay

proper identification of the cost driver within each pool and proper measures of

notbeaffectedbyfactorssuchasmachinehours.

activities.Tocomputetheactivityrate,totalcostinanactivitypoolisdividedbythe
measureoftheactivity.

ActivityBasedCostingRatesandMethods
ABCattemptsto more accurately assign overhead costs by focusing on activities that cause

D. Step4:Assignoverheadcoststocostobjects.Overheadcostsineachactivitycost

factoryoverheadcoststoincrease.Examplesofsuchactivitiesaremachinesetupcosts,cutting

poolareallocatedtoproductlinesandthendividedbythenumberofunitsofthat

parts,receivingshipment,andsamplingproductsforqualitycontrolpurposes.Theseactivities

productlinetoarriveatoverheadcostperproductunit.

are then matched with the activity that causes the cost to increase (the activity driver). The

AsimpleexampleofhowABCcanbeusedfollows.

costsoftheseactivitiesareoftendrivenbyactivitiesotherthandirectlaborhoursormachine

Example:

hours.
For example, quality control costs are driven by the number of product lots produced. So, a

WindyRiverFloatTripsusesactivitybasedcostingtocomputethecostoftheriverrafttrips.
Eachraftholdssixcustomersandaguide.Thecostsforthesefloattripsareasfollows:

productwithmorelotsproducedshouldbearmoreofthequalitycontrolcosts.
Engineering design modifications are costly, as engineers tend to be higher paid than most

Activities(costdriver)Costs($)

factory employees. The cost of engineering design modifications are driven by the number
change requests. A standardized product will require few change requests, where a product
that is customized may require several change requests. So, a product with more change

Trailerrentfee(trip)

$127pertrip

Advertising(trips)

215pertrip

Insurance(trips)

50pertrip

requestsshouldbeallocatedmoreoftheengineeringdesignmodificationcosts.
ABCaccumulatesoverheadcostsintoactivitypoolsandthenallocatesthosecoststoproducts
usingactivityratesinfoursteps.

Depreciation(trips,people) 40pertripplus$8perperson

A. Step one: Identify activities and cost pools. Activities causing overhead cost are
typically separated into four levels reflecting control: (1) unit level activities are
performed on each product unit, (2) batch level activities are performed only on

Wages(trips,guides)

400pertripperguide

Shorelunch(people)

60perperson

each batch or group of units, (3) product level activities are performed on each
product line independent of the number of units or batches, and (4) facility level
activitiesareperformedtosustainfacilitycapacityasawhole.

Required:Computethecostofarafttripwith4rafts,24customersand4guides.
Solution:

Activities

Costs($)

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TrailerRentFee

$127

Advertising

215

Insurance

50

Depreciation

264(($8/personx28people*)+$40/trip)

Wages

1,600($400/guidex4guides)

Shorelunch

1,680($60/personx28people*)

Total

$3,936costpertrip

*24customersplusfourguides=28people
AssessingActivityBasedCosting

A. AdvantagesofActivityBasedCosting
1. Moreaccurateoverheadcostallocationbecausetherearemorecostpools,
thecostsineachpoolaremoresimilar,andallocationisbasedonactivities
thatcauseoverheadcosts.
2. Moreeffectiveoverheadcostcontrolbyfocusingonprocessesoractivities.
3. Focus on relevant factors by assigning costs to any cost object that is of
interesttomanagement.
4. Bettermanagementofactivitiesbyhelpingmanagersidentifythecausesof
costsandtheactivitiesdrivingthem.

B. DisadvantagesofActivityBasedCosting
1. ABC is not easy to implement and maintain. ABC requires management
commitmentandfinancialresources.
2. UncertaintywithdecisionsmayremainandmanagementmustinterpretABC
datawithcautioninmakingmanagerialdecisions.

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