# Athletic Knit: Case Study Calculations

## Athletic Knit: Case Study Calculations

• Submitted By: akosheto
• Date Submitted: 09/27/2016 8:13 PM
• Words: 980
• Page: 4

Athletic Knit (March 2015) calculations
Capacity Analysis (rough cut)
Assume: 52 weeks, 5 days/week, 1 shift/day (i.e., 460 jerseys/shift), 10 days vacation, 7 statutory holidays
(2 during peak period); no consideration given to downtime due to set-up or mechanical failure
Season
Entire Year
7/15 – 8/14
8/15 – 11/1
11/2 – 12/1
12/2 – 7/14

Weeks % Sales
52
4
11
4
33

100%
10%
44%
10%
36%

Demand

Capacity

85,168
8,517
37,474
8,517
30,660

111,780
b
8,740
c
24,380
d
9,200
69,460

a

Utilization%

OT*

Util%
(OT*)

OT**

Util%
(OT**)

76%
98%
154%
93%
44%

139,725
10,925
30,475
11,500
86,825

61%
78%
123%
74%
36%

156,492
12,236
34,132
12,880
97,244

54%
70%
110%
66%
32%

*25% OT (i.e., two hours/day for five days (assumed))
**40% OT (i.e., two hours/day for five days and six hours on Saturday (assumed))
a
243 days * 460 jerseys/day
b
19 days * 460 jerseys/day
c
(55 days – 2 holidays) * 460 jerseys/day
d
20 days * 460 jerseys/day
If one also considers set-ups (in whatever numbers or sequence through 40 SKUs), then utilization %
numbers only look worse than they are above.
Conclusion: In peak season, AK does not have sufficient capacity to keep up with demand. It must
produce inventory prior to the peak season.
Inventory Analysis (rough cut)
Known: Holds 24-28 weeks (or 26 weeks) of demand in inventory in May; holds 8-10 weeks (or 9 weeks) of
demand in inventory after peak season.
Implies that inventory levels (pre-peak) around 42,584 units ([85,168 / 52 weeks] * 26 weeks), while
inventory levels (post-peak) around 14,741 units ([85,168 / 52 weeks] * 9 weeks).
Conclusion: It appears that AK is pre-building 27,843 units for the peak season. Is this too much to build
and hold prior to the peak demand period?

Inventory Analysis (batch size determination)
Given that SKU volumes differ, will not be able to presume the same EOQ for all SKUs. You can use ABC...