WEB-BASED RESEARCH PAPER
wt242500
OM-Ch03-BB1.pptxChapter 3: Project Management
[Note to students: please make one full-size copy of chart 3-23 for in-class demo]
Learning Objectives
Use a Gantt chart for scheduling
Draw AON networks
Complete forward and backward passes for a project
Determine a critical path
Calculate the variance of activity times
Crash a project
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Operations and Supply Chain Management
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Copyright © 2019 by Christine H. Probett
Project Management
A project is a temporary and often customized initiative that consists of many smaller _________ and activities that must be coordinated and completed to finish the entire initiative on time and within _________
Project management involves all activities associated with planning, scheduling, and controlling projects
Planning: goal setting, defining the project, team organization
Scheduling: relates people, money, and supplies to specific activities and activities to each other
Controlling: monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands
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Copyright © 2019 by Christine H. Probett
Phase 1: Project Planning
Project Planning
Establishing _________
Defining project
Creating work breakdown structure
Determining resources
Forming organization
Project Organization
Often temporary structure
Uses _________ from entire company
Headed by project manager
Coordinates activities
Monitors schedule and costs
Permanent structure called ‘matrix organization’
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Copyright © 2019 by Christine H. Probett
Work Breakdown Structure
Work Breakdown Structure (WBS): a hierarchical description of a project into more and more _________ components
(Project)
(Major Tasks)
(Subtasks)
(Activities or
work packages)
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Phase 2: Project Scheduling
Project scheduling
Identifying precedence relationships
Sequencing activities
Determining activity _________ & costs
Estimating material & worker requirements
Determining critical activities
Scheduling techniques
Ensure that _________ activities are planned for
Their order of performance is accounted for
The activity time estimates are recorded
The overall project time is developed
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Copyright © 2019 by Christine H. Probett
Project Scheduling Charts
Charts are useful because their _________ presentation is easily understood
Software is available to create the charts
Gantt chart: a bar chart showing both the amount of time involved and the sequence in which activities can be _________
Henry Gantt designed
the Gantt chart around
1910 so supervisors
could quickly know if
work was on schedule,
ahead or behind
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Copyright © 2019 by Christine H. Probett
Phase 3: Project Controlling
Detailed cost breakdowns for each _________
Total program labor curves
Cost distribution tables
Functional cost and hour summaries
Raw materials and expenditure _________
Variance reports
Time analysis reports
Work status reports
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Copyright © 2019 by Christine H. Probett
Project Planning, Scheduling, and Controlling _________
Before Start of During
project project project
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Several Principles for Project Managers
Manage people individually and as a project team
Reinforce the commitment and excitement of the project team
Keep everyone _________
Build agreements and consensus among the team
_________ the project team
Performance Objectives
Cost
Schedule
Quality
The “Project
Management
Triangle”
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Copyright © 2019 by Christine H. Probett
Contributors/Impediments to Project Success
Contributors to Project Success:
Well-defined and agreed-upon objectives
Top-management support
Strong project manager leadership
Well-defined project definition
_________ time and cost estimates
Teamwork and cooperation
Effective use of project management tools
Clear channels of communication
Adequate _________ and reasonable deadlines
Constructive response to conflict
Impediments to Project Success:
Ill-defined project objectives
Lack of executive champion
Inability to develop and motivate people
Poorly defined project definition
Lack of data accuracy and integrity
Poor interpersonal relations and teamwork
Ineffective use of project management tools
Poor communication
Unreasonable time pressures and lack of resources
Inability to resolve conflict
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Copyright © 2019 by Christine H. Probett
Ethical Issues
Project managers face many ethical decisions on a _________ basis
The Project Management Institute (www.pmi.org) has established an ethical code to deal with problems such as:
Offers of gifts from contractors
Pressure to alter status reports to mask delays
False reports for charges of time and expenses
Pressure to compromise _________ to meet schedules
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Copyright © 2019 by Christine H. Probett
Network Planning Techniques: CPM & PERT
Developed in 1950’s
Critical Path Method (CPM) by DuPont for chemical plants (1957)
Project Evaluation and Review Technique (PERT) by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)
Both consider precedence relationships and interdependencies
Each uses a different estimate of activity times
CPM assumes we know a _________ time estimate for each activity and there is no variability in activity times
PERT uses a probability distribution for activity times to allow for _________
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Copyright © 2019 by Christine H. Probett
Questions CPM and PERT can Answer
When will the entire project be completed?
What are the critical activities or tasks in the project?
Which are the noncritical activities?
What is the probability the project will be completed by a specific date?
Is the project on schedule, behind schedule or ahead of schedule?
Is the money spent equal to, less than, or greater than the budget?
Are there enough resources available to finish the project on time?
If the project must be finished in a shorter time, what is the way to accomplish this at least cost?
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Copyright © 2019 by Christine H. Probett
CPM and PERT Steps
General Steps
Define the project and prepare the work breakdown structure
Develop _________ among the activities - decide which activities must precede and which must follow others
Draw the network connecting all of the activities
Assign time and/or cost estimates to each activity
Compute the longest time path through the network – this is called the _________ path
Use the network to help plan, schedule, monitor, and control the project
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Copyright © 2019 by Christine H. Probett
Activity on Node (AON) Network Conventions
Both A and B must be complete
before C can start
A must be complete before
B or C can start
A
B
C
B
C
A
Under AON method, ______ (circles) represent activities and arcs (arrows) define the precedence _________ between activities
Immediate predecessor: activity that needs to be completed immediately before another activity
Many of project management software packages use AON networks - we will focus on this method. Conventions:
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Copyright © 2019 by Christine H. Probett
Critical Path Method Definitions
Critical Path Method (CPM): an approach to scheduling and controlling project activities
Critical path: the sequence of activities that takes the _________ time and defines the total project completion time
Critical activities: Activities on the critical path
Slack: Allowable _________ for path; the difference the length of path and the length of critical path
Critical path activities have no slack time
Nodes in the project network are replaced with boxes (“Sudoku Squares”) that provide information to determine the duration of each path
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Copyright © 2019 by Christine H. Probett
CPM _________
ES
EF
LS
LF
T
N
Text Method:
Alternate Method (our class!)
(“Sudoku Squares”):
N: Identification Number or symbol for the activity
T: Activity duration, normal Time to complete the activity
ES: Earliest Start, earliest time at which an activity can start, assuming all predecessors have been completed
EF: Earliest Finish, earliest time at which an activity can be finished
LS: Latest Start, latest time at which an activity can start so as to not delay the completion time of the entire project
LF: Latest Finish, latest time by which an activity has to be finished so as to not delay the completion time of the entire project
ST: Slack Time, length of time an activity can be delayed without affecting the completion date for the entire project, computed as ST = LS – ES = LF – EF
ES
N
EF
ST
ST
LS
T
LF
BA 360
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Copyright © 2019 by Christine H. Probett
CPM _________ and Rules
Step 1: Forward pass: first ES = 0
Rule 1: EF = ES + T
Rule 2: the ES time for an activity equals the largest EF time
of all immediate predecessors
ES
N
EF
ST
ST
LS
T
LF
N: Identification Number
T: Activity duration, Time to complete
ES Earliest Start
EF Earliest Finish
LS Latest Start
LF: Latest Finish
ST: Slack Time
Step 2: Backward pass: first LF = last EF
Rule 3: LS = LF – T
Rule 4: the LF time for an activity is the smallest LS of all
immediate successors
Step 3: Calculate slack (ST = LS – ES = LF – EF) and critical path
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper _________
Milwaukee Paper Manufacturing had long delayed the expense of installing advanced computerized air pollution control equipment in its facility
When the Board of Directors adopted a new proactive policy on sustainability, it directed the plant manager to complete the installation in time for a major announcement of policy on Earth Day, 16 weeks away!
Milwaukee Paper has identified eight activities that need to be performed in order for the project to be completed
See following table showing activity precedence relationships
Task: draw AON network, compute earliest start and finish and latest start and finish times for each activity, calculate slack times, and determine critical path for the Milwaukee Paper project
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper Project
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper Network Diagram (Activity on _________)
Start
A
C
F
E
G
H
D
B
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper ______ Estimates
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper “Sudoku Squares”
Nodes in the project network are replaced with boxes (“Sudoku Squares”) that provide information to determine the duration of each path
Start
A
C
F
E
G
H
D
B
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Operations and Supply Chain Management
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Copyright © 2019 by Christine H. Probett
CPM _________ and Rules
Step 1: Forward pass: first ES = 0
Rule 1: EF = ES + T
Rule 2: the ES time for an activity equals the largest EF time
of all immediate predecessors
ES
N
EF
ST
ST
LS
T
LF
N: Identification Number
T: Activity duration, Time to complete
ES Earliest Start
EF Earliest Finish
LS Latest Start
LF: Latest Finish
ST: Slack Time
Step 2: Backward pass: first LF = last EF
Rule 3: LS = LF – T
Rule 4: the LF time for an activity is the smallest LS of all
immediate successors
Step 3: Calculate slack (ST = LS – ES = LF – EF) and critical path
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper Forward Pass
1. Forward pass:
First ES = 0
EF = ES + T
ES next = largest
0
0
0
2
2
4
4
7
4
8
13
8
13
3
7
0
3
15
Start
A
C
F
E
G
H
D
B
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Copyright © 2019 by Christine H. Probett
CPM _________ and Rules
Step 1: Forward pass: first ES = 0
Rule 1: EF = ES + T
Rule 2: the ES time for an activity equals the largest EF time
of all immediate predecessors
ES
N
EF
ST
ST
LS
T
LF
N: Identification Number
T: Activity duration, Time to complete
ES Earliest Start
EF Earliest Finish
LS Latest Start
LF: Latest Finish
ST: Slack Time
Step 2: Backward pass: first LF = last EF
Rule 3: LS = LF – T
Rule 4: the LF time for an activity is the smallest LS of all
immediate successors
Step 3: Calculate slack (ST = LS – ES = LF – EF) and critical path
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Operations and Supply Chain Management
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper Backward Pass
1. Forward pass:
First ES = 0
EF = ES + T
ES next = largest
2. Backward pass:
First LF = Last EF
LS = LF - T
LF next = smallest
15
13
13
10
13
8
8
4
4
2
8
4
2
0
4
1
0
0
Start
A
C
F
E
G
H
D
B
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Copyright © 2019 by Christine H. Probett
CPM _________ and Rules
Step 1: Forward pass: first ES = 0
Rule 1: EF = ES + T
Rule 2: the ES time for an activity equals the largest EF time
of all immediate predecessors
ES
N
EF
ST
ST
LS
T
LF
N: Identification Number
T: Activity duration, Time to complete
ES Earliest Start
EF Earliest Finish
LS Latest Start
LF: Latest Finish
ST: Slack Time
Step 2: Backward pass: first LF = last EF
Rule 3: LS = LF – T
Rule 4: the LF time for an activity is the smallest LS of all
immediate successors
Step 3: Calculate slack (ST = LS – ES = LF – EF) and critical path
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper Calculate Slack Time
1. Forward pass:
First ES = 0
EF = ES + T
ES next = largest
3. Calculate slack
ST = LS – ES = LF - EF
2. Backward pass:
First LF = Last EF
LS = LF - T
LF next = smallest
0
0
0
0
1
1
1
1
0
0
0
0
0
0
6
6
0
0
Start
A
C
F
E
G
H
D
B
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper Determine Critical Path
Multiple paths:
(Start)-A-C-F-H
(Start)-A-C-E-G-H
(Start)-A-D-G-H
(Start)-B-D-G-H
Critical Path
(Start)-A-C-E-G-H
0
2
2
3
2
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper ES–EF Gantt Chart (_________ Path in red)
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install frame
E Build high-temperature burner
F Install pollution control system
G Install air pollution device
H Inspect and test
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper ES–EF Gantt Chart (Example of _________ in completion of activity E)
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install frame
E Build high-temperature burner
F Install pollution control system
G Install air pollution device
H Inspect and test
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
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Copyright © 2019 by Christine H. Probett
Variability in Activity Times
PERT (Project Evaluation and Review Technique) is another approach to project management
PERT was developed to handle uncertainties and _________ in activity completion times
In contrast, CPM assumes that activity times are _________
Three PERT estimates are obtained for each activity:
Optimistic time (a): activity time under ideal conditions
Most likely time (m): most realistic activity time under normal conditions
Pessimistic time (b): activity time if breakdowns or serious delays occur
Time expected (t): weighted average of three time estimates
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Copyright © 2019 by Christine H. Probett
Variability in Activity _________
Expected time: t = 1a + 4m + 1b t = a + 4m + b
6 6
Expected duration of a path:
Path duration = Σ of expected times of activities on the path
Variance of each activity: σ2 = [(b – a)/6]2
Standard deviation of path:
σpath = Σ (Variances of activities on path)
And,
σ = σ2
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Copyright © 2019 by Christine H. Probett
_________ in Activity Times
Estimate follows beta distribution
Probability of 1 in 100 of > b occurring
Probability of 1 in 100 of < a occurring
Probability
Optimistic Time (a)
Most Likely Time (m)
Pessimistic Time (b)
Activity Time
Expected
Time (t)
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Copyright © 2019 by Christine H. Probett
Path Probabilities
PERT makes two more assumptions:
Total project completion times follow a normal probability distribution
Activity times are _________ independent
The probability that a given path will be completed in a specified length of time:
z = Specified time – Path duration
Path standard deviation (σpath )
Note: σpath = Σ (Variances of activities on path)
z indicates how many standard deviations of the path distribution the specified time is beyond the expected path
Rule of _________ : if the value of z is +3.00 or more, treat the probability of path completion by the specified time as 100%
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Operations and Supply Chain Management
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Copyright © 2019 by Christine H. Probett
_________ Expected Time (t) and Variance (σ2)
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Copyright © 2019 by Christine H. Probett
_________ Expected Time (t) and Variance (σ2)
tA = 1 + 4(2) + 3
6
σA2 = [(3-1) / 6]2
tB = 2 + 4(3) + 4
6
σB2 = [(4-2) / 6]2
tC = 1 + 4(2) + 3
6
σC2 = [(3-1) / 6]2
tD = 2 + 4(4) + 6
6
σD2 = [(6-2) / 6]2
tE = 1 + 4(4) + 7
6
σE2 = [(7-1) / 6]2
tF = 1 + 4(2) + 9
6
σF2 = [(9-1) / 6]2
tG = 3 + 4(4) + 11
6
σG2 = [(11-3) / 6]2
tH = 1 + 4(2) + 3
6
σH2 = [(3-1) / 6]2
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper
What is the probability this project can be completed on or before the 16 week deadline?
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Copyright © 2019 by Christine H. Probett
Normal Curve Areas (Appendix I, back of textbook) Page A2
To find the area under the normal curve, you must know the how many
standard deviations that point is to the right of the mean. Then, the area
under the normal curve can be read directly from the table. For example,
the total area under the normal curve for a point that is 1.55 standard deviations
to the right of the mean is 0.93943 (x 100% = 93.94%)
z
0.0x
0.x
Area under curve
= probability
How to use the chart:
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Copyright © 2019 by Christine H. Probett
Use Appendix I to determine area under curve: z = 0.57 Area = 0.7157 = 71.57%
Probability of Milwaukee Paper Project Completion in 16 Weeks
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Copyright © 2019 by Christine H. Probett
Probability of Milwaukee Paper Project Completion
Time
Probability (T ≤ 16 weeks) is 71.57%
0.57 Standard deviations
15 16 Weeks Weeks
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Copyright © 2019 by Christine H. Probett
Another PERT Example
A
B
D
E
C
F
2, 1
2, 0.8
3, 1
4, 0.5
3, 0.2
1, 0.5
Expected time Variance
What is the expected completion time and variance for this project?
What is the probability that the project will meet a 12-day deadline?
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Copyright © 2019 by Christine H. Probett
3-44
Use Appendix I to determine the area under the curve (table values are for positive values of z). So z = + 1.07 is 0.8577.
However, since z has a negative sign, must subtract the area from 1 (for the remaining area)
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Operations and Supply Chain Management
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Copyright © 2019 by Christine H. Probett
Advantages of CPM/PERT
Especially useful when scheduling and controlling _________ projects
Straightforward concept and not mathematically complex
Graphical networks help highlight relationships among project activities
Critical path and slack time analyses help pinpoint activities that need to be closely _________
Project documentation and graphics point out who is responsible for various activities
Applicable to a wide variety of projects
Useful in monitoring not only schedules but costs as well
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Copyright © 2019 by Christine H. Probett
Limitations of CPM/PERT
Project activities have to be clearly defined, independent, and stable in their relationships
Precedence relationships must be specified and networked together
Time estimates tend to be subjective and are subject to _________ by managers
There is an inherent danger of _________ emphasis being placed on the longest, or critical, path
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Copyright © 2019 by Christine H. Probett
Project Crashing
It is not uncommon to face the following situations:
The project is behind _________
The completion time has been moved forward
Crashing a project refers to reducing the total time to complete the project to meet a revised due date
However, doing so has a cost – must evaluate the trade-offs between faster completion times and additional costs
Factors to consider when crashing a project
The amount by which an activity is crashed is, in fact, permissible
Taken together, the shortened activity durations will enable us to finish the project by the due date
The total cost of crashing is as _________ as possible
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Copyright © 2019 by Christine H. Probett
Steps to Crash a Project
Steps:
Determine the crash cost per unit of time (period) for each activity. The only way to _________ project completion time is by reducing activities on the critical path
If there is only one critical path, select the activity that has the smallest crash cost per period and crash this activity by one period. If there is more than one critical path, select one activity from each critical path such that total crash cost of all activities is _________ and crash each activity by one period.
Update all activity times. If desired due date has been reached, stop. If not, repeat step 2.
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Copyright © 2019 by Christine H. Probett
Crashing
Normal time (NT) = normal time to _________ an activity
Normal cost (NC) = normal cost to complete an activity
Crash time (CT) = the shortest possible time the activity can realistically be completed
Some activities _________ be crashed due to the nature of the task
Crash cost (CC) = the cost associated with completing an activity in its crash time rather than in its normal time
Crash cost per unit of time =
CC – NC
NT – CT
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper – Normal/Crash Costs and Time
Total Project Cost: $308,000
Critical Path: A-C-E-G-H
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper - Crashing
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Copyright © 2019 by Christine H. Probett
Crash and Normal Times and Costs for _________
| | |
1 2 3 Time (Weeks)
$34,000 —
$33,000 —
$32,000 —
$31,000 —
$30,000 —
—
Activity Cost
Crash time
Normal
time
Crash Time
Normal Time
Crash Cost
Normal Cost
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Operations and Supply Chain Management
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Copyright © 2019 by Christine H. Probett
Milwaukee Paper - Crashing
What to do to reduce the project by 1 week?
Total Project Cost: $308,000
Critical Path: A-C-E-G-H
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Milwaukee Paper - Crashing
What to do to reduce the project by 1 week?
Total Project Cost: $308,000
Critical Path: A-C-E-G-H
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Milwaukee Paper (Crash 1 week A)
Multiple paths:
Start-A-C-F-H = 0+1+2+3+2 = 8 weeks duration
Start-A-C-E-G-H = 0+1+2+4+5+2 = 14 weeks duration (critical path)
Start-A-D-G-H = 0+1+4+5+2 = 12 weeks duration
Start-B-D-G-H = 0+3+4+5+2 = 14 weeks duration (critical path)
Now there are
2 Critical Paths!
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Milwaukee Paper - Crashing
What to do to reduce the project by one more week?
Total Project Cost: $308,750
Crash one week: 750
Critical Paths: A-C-E-G-H and B-D-G-H
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Milwaukee Paper (Crash 1 week A and G)
Multiple paths:
Start-A-C-F-H = 0+1+2+3+2 = 8 weeks duration
Start-A-C-E-G-H = 0+1+2+4+4+2 = 13 weeks duration (critical path)
Start-A-D-G-H = 0+1+4+5+2 = 11 weeks duration
Start-B-D-G-H = 0+3+4+4+2 = 13 weeks duration (critical path)
There are still
2 Critical Paths!
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Milwaukee Paper - Crashing
What to do to reduce the project by one more week?
Total Project Cost: $310,250
Crash two weeks: 2,250 (=750 + 1500)
Critical Paths: A-C-E-G-H and B-D-G-H
Slide upated Bolton 2/19
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Milwaukee Paper (Crash 1 wk A and 2 wks G)