Overtime or a Second Shift: Which Costs Less?

The order is 260 garments short and the date will not move. There are two ways to make the garments: keep the line on after hours, or bring in a second crew. Most owners pick by feel, usually overtime because it needs no hiring. The two can be costed, per garment, in a few lines of arithmetic.

What you need to know first

• The cost of an operator-hour. What one operator costs you for one hour, wages and nothing else.
• The overtime rate. What an overtime hour is paid at, as a multiple of a normal one. Check what applies to your unit; the example below uses double.
• The efficiency of the hours. How many garments an hour of the line turns out. The line efficiency article shows how to get it.

A worked example

These figures are made up to show the sum. They are not a benchmark, not a wage anybody should pay, and not a claim about any unit. The line and its output are the ones in the efficiency article: 12 operators, a standard time (SAM) of 18 minutes a garment, and 81.3% efficiency, which is 260 garments in an 8-hour day. The wage is an assumption: ₹400 an operator-hour, which is the ₹6.67 a minute used in the rejects and rework article.

At that efficiency the line makes 12 × 60 × 0.8125 ÷ 18 = 32.5 garments an hour. The shortfall is 260 garments — one more day's output.

Option one: overtime

Say the line works 4 extra hours a day. That is 130 garments a day, so two days of overtime cover the 260. The hours are 12 operators × 4 hours × 2 days = 96 operator-hours, paid at double: 96 × ₹400 × 2 = ₹76,800. Per garment: ₹76,800 ÷ 260 = ₹295.38.

Option two: a second crew

A second crew of 12, at the same efficiency, works one normal 8-hour day and makes the 260 garments. The hours are 12 × 8 = 96 operator-hours, at the normal rate: 96 × ₹400 = ₹38,400. Per garment: ₹147.69.

The same 96 operator-hours, the same 260 garments. The only difference is the rate each hour is paid at, so overtime at double costs exactly twice as much, ₹38,400 more.

Where it can flip

A fair comparison cannot assume both crews work equally well. A crew new to the style, or a line at the end of a long day, will not make 32.5 garments an hour. Two cases:

• If overtime efficiency falls to 65%: the 4 hours make 104 garments, so the order takes 2.5 days of overtime, 120 operator-hours, ₹96,000 — ₹369.23 a garment.
• If the second crew also runs at 65%: a day makes 208 garments, and 260 costs ₹38,400 ÷ 208 = ₹184.62 each.

The second crew stays the cheaper option, per garment, until its efficiency drops below about 40.6%, assuming the overtime is at 81.3%. At those figures, then, the answer does not flip on the sums alone. It flips on whether you have a second crew to put on.

What the sums leave out

• Machines and space. A second crew needs 12 machines that are idle. If they are not, the option does not exist.
• Hiring and training. The ₹38,400 assumes the second crew is already on your books. Taking on people for one order is a cost this does not count.
• Supervision, power, transport. Both options need them. Neither is in the sums, and they differ by unit.
• A made-up wage and overtime rate. Use your own. A lower overtime multiple narrows the gap; the sums work the same way.
• What overtime does to the people. Output on the ninth and tenth hour is a number to measure, not assume.

Measure yours

For the next late order, write down the garments made per hour in the normal hours and in each overtime hour. Two columns on a sheet are enough to tell whether your line at 4 p.m. is the line of 9 a.m.

The efficiency calculator gives the garments an hour for your line. Put the answer through the sums above before you decide, and the minimum order article covers the other side of the same problem: the order that was too small to start.