1. Operations Management Project Management Chapter 3

2. Learning Objectives
When you complete this chapter, you should be able to :
Identify or Define:
Work breakdown structure
Critical path
AOA and AON Networks
Forward and Backward Passes
Early Start or Early Finish
Variability in Activity Times

3. Learning Objectives - Continued
When you complete this chapter, you should be able to :
Describe or Explain:
The role of the project manager
Program evaluation and review technique (PERT)
Critical path method (CPM)
Crashing a project
The Use of MS Project

4. Bechtel
Asked by Kuwait to begin rebuilding after Desert Storm (Not unlike now)
650 wells ablaze, others uncapped
No water, electricity, food or facilities
Land mines! Bombs! Grenades!
Many fires inaccessible because of oil-covered roads

5. Bechtel Project required:
Storage, docking, and warehousing facilities at Dubai
125,000 tons of equipment and supplies
150 kilometers of pipeline capable of delivering 20,000,000 gallons of water per day to the fire site
more than 200 lagoons with 1,000,000 gals of seawater

6. Defining Global Operations
International business - engages in cross-border transactions
Multinational Corporation - has extensive involvement in international business, owning or controlling facilities in more than one country
Global company - integrates operations from different countries, and views world as a single marketplace
Transnational company - seeks to combine the benefits of global-scale efficiencies with the benefits of local responsiveness

7. Management of any Project Requiring Coordination
Planning - goal setting, project definition, team organization
Scheduling - relating people, money, and supplies to specific activities and activities to one and other
Controlling - monitoring resources, costs, quality, and budgets; revising plans and shifting resources to meet time and cost demands
Leading – The humanistic elements!

8. Project Management Activities
Planning
Objectives
Resources
Work break-down schedule
Organization
Scheduling
Project activities
Start & end times
Network
Controlling
Monitor, compare, revise, action

9. Project Planning Establishing objectives Defining project
Creating work breakdown structure
Determining resources
Forming organization
© 1995 Corel Corp.

10. Project Organization Often temporary structure
Uses specialists from entire company
Headed by project manager
Coordinates activities
Monitors schedule & costs
Permanent structure called ‘matrix organization’
Acct.
Eng.
Mkt.
Mgr.
© 1995 Corel Corp.

11.  Matrix Organization Mkt Oper Eng Fin Project 1 Project 2 Project 3

12. The Role of the Project Manager
Project Plan
and Schedule
Revisions and
Updates
Project
Manager
Team
Top
Management
Resources
Performance
Reports
Information
regarding times,
costs, problems,
delays
Feedback Loop

13. Work Breakdown Structure
1. Project
Major tasks in the project
3. Subtasks in the major tasks
Activities (or work packages) to be completed

14. Project Scheduling Identifying precedence relationships
Sequencing activities
Determining activity times & costs
Estimating material & worker requirements
Determining critical activities
© 1995 Corel Corp. J F M A
Month
Activity
Design
Build
Test
PERT

15. CRITICAL THINKING EXERCISE
Chapter 3 - Pg 88
Form into teams of 3-4
List in actual order - Present to class
30 minutes

16. CRITICAL THINKING EXERCISE
1. March 13, 1991 Lower downtown site selected
2. December 31, 1991 Largest portion of land purchased
3. February 13, 1992 Final lease negotiations start
4. April 1, 1992 Schematic design of ballpark starts
5. April 21, 1992 Contractor selected
6. October 8, 1992 Architect presents exterior elevations of ballpark to the public
7. October 16, 1992 Constructions starts

17. CRITICAL THINKING EXERCISE
8. November 30, 1992 Mass excavation commences
9. February 2, 1993 Agreement on final terms of lease
10. February 15, 1993 Caissons and foundation start
11. July 14, 1993 Last parcel of land purchased
12. September 24, 1993 First steel raised
13. October 6, 1993 Final seating capacity set
14. March 11, 1994 First bricks placed
15. September 19, 1994 Scoreboard installed

18. CRITICAL THINKING EXERCISE
16. October 25, 1994 Sod transplanted to playing field
17. February 27, 1995 Sports lighting turned on at night
18. March 31, 1995 Field ready for opening day

19. Project Management Techniques
Gantt chart
Critical Path Method (CPM)
Program Evaluation & Review Technique (PERT)
© T/Maker Co.

20. Gantt Chart J F M A
Time Period
Activity
Design
Build
Test

21. Service Activities for A Delta Jet During a 60 Minute Layover

22. PERT and CPM Network techniques Developed in 1950’s
CPM by DuPont for chemical plants (1957)
PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)
Consider precedence relationships and interdependencies
Each uses a different estimate of activity times

23. The Six Steps Common to PERT & CPM
Define the project and prepare the work breakdown structure,
Develop relationships 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 critical path
Use the network to help plan, schedule, monitor, and control the project

24. A Comparison of AON and AOA Network Conventions

25. AON Network for Milwaukee General Hospital
Start A B C D F G H
Arrows show precedence relationships

26. AOA Network (With Dummy Activities) for Milwaukee General
Construct stack 1 3 2 4 5 6 7
A Build internal components
Install controls F
Dummy Activity
Build burner E H
Inspect/Test
Modify roof/floor B
Install pollution control device G D
Pour concrete/ Install frame

27. Critical Path for Milwaukee General Hospital
Start H B D G
Arrows show precedence relationships

28. AON Network for Milwaukee General Hospital
Start A B C D F G H 13 2 15 8 5 4 10 3 7 E 1
Slack=0
Slack=6
Slack=1
Slack=0

29. Gantt Chart Earliest Start and Finish
Milwaukee General Hospital
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

30. Factors: Consider when Crashing a Project / Activity (Shortening time)
The amount by which an activity is crashed is, in fact, permissible to the outcomes or legal or practical?
Taken together, the shortened activity durations will enable one to finish the project by the due date.
The total cost of crashing is as small as possible.

31. Operations Management Forecasting Chapter 4

32. Learning Objectives
When you complete this chapter, you should be able to :
Identify or Define:
Forecasting
Types of forecasts
Time horizons
Approaches to forecasts

33. Types of Forecasts Economic forecasts Technological forecasts
Address business cycle, e.g., inflation rate, money supply etc.
Technological forecasts
Predict rate of technological progress
Predict acceptance of new product
Demand forecasts
Predict sales of existing product

34. Seven Steps in Forecasting
Determine the use of the forecast
Select the items to be forecasted
Determine the time horizon of the forecast
Select the forecasting model(s)
Gather the data
Make the forecast
(Many steps inserted here)
Validate and implement results

35. Realities of Forecasting
Forecasts are seldom perfect
Most forecasting methods assume that there is some underlying stability in the system
Both product family and aggregated product forecasts are more accurate than individual product forecasts

36. Delphi Method Iterative group process 3 types of people
Decision makers
Staff
Respondents
Reduces ‘group-think’
Decision Makers
(Sales?)
Staff
(Sales will be 50!)
(What will sales be? survey)
Respondents
(Sales will be 45, 50, 55)

37. Time Series Components
Trend
Seasonal
Cyclical
Random

38. Trend Component Persistent, overall upward or downward pattern
Due to population, technology etc.
Several years duration
Mo., Qtr., Yr.
Response
© T/Maker Co.

39. Seasonal Component Regular pattern of up & down fluctuations
Due to weather, customs etc.
Occurs within 1 year
Mo., Qtr.
Response
Summer
© T/Maker Co.

40. Common Seasonal Patterns
Period of Pattern
“Season” Length
Number of “Seasons” in Pattern
Week
Day 7
Month
4 – 4 ½
28 – 31
Year
Quarter 4 12 52

41.  Cyclical Component Repeating up & down movements
Due to interactions of factors influencing economy
Usually 2-10 years duration
Mo., Qtr., Yr.
Response
Cycle 

42. Random Component Erratic, unsystematic, ‘residual’ fluctuations
Due to random variation or unforeseen events
Union strike
Tornado
Short duration & nonrepeating

43. Regression Actual observation Values of Dependent Variable
Deviation
Deviation
Deviation
Deviation
Point on regression line
Deviation
Values of Dependent Variable
Deviation
Deviation
Time

44. Scatter Diagram
Primarily used to look for patterns

45. Correlation
Answers: ‘how strong is the linear relationship between the variables?’
Used mainly for understanding

46. Forecasting in the Service Sector
Presents unusual challenges
special need for short term records
needs differ greatly as function of industry and product
issues of holidays and calendar
unusual events

47. Forecast of Sales by Hour for Fast Food Restaurant