Professional Documents
Culture Documents
Control is the review of work progress, make corrections where required; thus
ensuring that the actual is as per plan. Control includes activities such as dispatching,
progressing & expediting
CAPACITY PLANNING: Estimation of requirements of men & machines to meet the firms
planned level of business over the short / medium & long term. Alternatively this could the
responsibility of the Engineering dept.
DEMAND MANAGEMENT: making projections of demand for various products, which can
become a basis for production planning. Various demand forecasting techniques are used
to forecast demand. For the medium term (6-18 months) an Aggregate Sales & Operations
plan is prepared. Thereon a firm schedule is created (Master Production Schedule).
Normally the sales / marketing / product management departments will do this.
Produced to
order Convert Work order into
Issue Shop orders
Shop Order
Demand Management
Qualitative Forecasting Methods
Simple & Weighted Moving Average Forecasts
Exponential Smoothing
Simple Linear Regression
Web-Based Forecasting
Independent Demand:
Finished Goods
A Dependent Demand:
Raw Materials,
Component parts,
B(4) C(2) Sub-assemblies, etc.
Qualitative (Judgmental)
Quantitative
Time Series Analysis
Causal Relationships
Simulation
Seasonal
Seasonalvariation
variation
x
x x Linear
Linear
x x
x x Trend
x x Trend
Sales
x x x
x
x
xx
x xx x x
x
x
x x x x x x
x x x x x x
x x x
x xxxxx
x
x x
1 2 3 4
Year
4. PPC & PERT/CPM
Qualitative Methods
10 00
9 00
Dema nd
8 00
Demand
3 -W e ek
7 00
6 -W e ek
6 00
5 00 Note
Notehow
howthethe
1 2 3 4 5 6 7 8 9 10 1 1 1 2 3-Week
3-Weekisis
Week smoother
smootherthan
than
the
theDemand,
Demand,
and
and6-Week
6-Weekisis
4. PPC & PERT/CPM
even
evensmoother
smoother
Simple Moving Average Problem (2) Data
Question:
Question: WhatWhat is is the
the 33
week
week moving
moving average
average
Week Demand forecast
forecast forfor this
this data?
data?
1 820
Assume
Assume you you only
only have
have 33
2 775
weeks
weeks and and 55 weeks
weeks of of
3 680
4 655
actual
actual demand
demand data data
5 620 for
for the
the respective
respective
6 600 forecasts
forecasts
7 575
4. PPC & PERT/CPM
Simple Moving Average Problem (2)
Solution
Week Demand 3-Week 5-Week
1 820 F4=(820+775+680)/3
2 775 =758.33
3 680 F6=(820+775+680
+655+620)/5
4 655 758.33 =710.00
5 620 703.33
6 600 651.67 710.00
7 575 625.00 666.00
Note
Notethat
thatthe
theweights
weightsplace
placemore
moreemphasis
emphasison
onthe
the
most
mostrecent
recentdata,
data,that
thatisistime
timeperiod
periodt-1
t-1
4. PPC & PERT/CPM
Weighted Moving Average Problem (1)
Solution
F4 = 0.5(720)+0.3(678)+0.2(650)=693.4
4. PPC & PERT/CPM
Weighted Moving Average Problem (2) Data
Question:
Question:Given
Giventhe theweekly
weeklydemand
demandinformation
informationand
and
weights,
weights,what
whatisisthe
theweighted
weightedmoving
movingaverage
averageforecast
forecast
of
ofthe
the55th period
th
periodor orweek?
week?
F5 = (0.1)(755)+(0.2)(680)+(0.7)(655)= 672
4. PPC & PERT/CPM
Exponential Smoothing Model
FFtt == FFt-1t-1 ++
(A
(At-1t-1 -- FFt-1t-1))
Where :
Ft = Forcast value for the coming t time period
Ft - 1 = Forecast value in 1 past time period
At - 1 = Actual occurance in the past t time period
= Alpha smoothing constant
Premise: The most recent observations might
have the highest predictive value
Therefore, we should give more weight to the
more recent time periods when forecasting
4. PPC & PERT/CPM
Exponential Smoothing Problem (1) Data
8 689
9 775
10
4. PPC & PERT/CPM
Answer:
Answer:The
Therespective
respectivealphas
alphascolumns
columnsdenote
denotethe
theforecast
forecastvalues.
values. Note
Note
that
thatyou
youcan
canonly
onlyforecast
forecastone
onetime
timeperiod
periodinto
intothe
thefuture.
future.
Week Demand 0.1 0.6
1 820 820.00 820.00
2 775 820.00 820.00
3 680 815.50 793.00
4 655 801.95 725.20
5 750 787.26 683.08
6 802 783.53 723.23
7 798 785.38 770.49
8 689 786.64 787.00
9 775 776.88 728.20
10 776.69 756.28
4. PPC & PERT/CPM
Exponential Smoothing Problem (1)
Plotting
Note
Notehow
howthat
thatthe
thesmaller
smalleralpha
alpharesults
resultsin
inaa smoother
smootherline
line
in
inthis
thisexample
example
900
800 Demand
Demand
700 0 .1
600 0 .6
500
1 2 3 4 5 6 7 8 9 10
Week
Question:
Question: What
What are
are the
the
Week Demand
exponential
exponential smoothing
smoothing
1 820
forecasts
forecasts for
for periods
periods 2-5
2-5
2 775 using a =0.5?
using a =0.5?
3 680
4 655
5 Assume
Assume FF11=D
=D11
Question:
Question: What
What isis the
the MAD
MAD value
value given
given
the
the forecast
forecast values
values inin the
the table
table below?
below?
40
n
Note
Notethat
thatby
byitself,
itself,the
theMAD
A
t=1
t - Ft
40 only
onlylets
letsus
usknow
knowthe
MAD
themean
mean
MAD = = = 10 error
errorininaaset
setof
offorecasts
forecasts
n 4
Yt = a + bx Is
Isthe
thelinear
linearregression
regressionmodel
model
a = y - bx
xy - n(y)(x)
b= 2 2
x - n(x )
Question:
Question:Given
Giventhe
thedata
databelow,
below,what
whatisisthe
thesimple
simplelinear
linear
regression
regressionmodel
modelthat
thatcan
canbe
beused
usedto
topredict
predictsales
salesin
infuture
future
weeks?
weeks?
Week Sales
1 150
2 157
3 162
4 166
5 177
4. PPC & PERT/CPM
42
Answer:
Answer: First,
First,using
using the
thelinear
linear regression
regressionformulas,
formulas, we
we
can
can compute
computea aand
andb
b
Week Week*Week Sales Week*Sales
1 1 150 150
2 4 157 314
3 9 162 486
4 16 166 664
5 25 177 885
3 55 162.4 2499
Average Sum Average Sum
b=
xy - n(y)(x) 2499 - 5(162.4)(3) 63
= = = 6.3
x - n(x )
2 2
55 5(9) 10
155 Forecast
150
145
140
135
1 2 3 4 5
Period
4. PPC & PERT/CPM
Web-Based Forecasting: CPFR
Collaborative Planning, Forecasting, and Replenishment
(CPFR) a Web-based tool used to coordinate demand
forecasting, production and purchase planning, and inventory
replenishment between supply chain trading partners.
Used to integrate the multi-tier or n-Tier supply chain,
including manufacturers, distributors and retailers.
CPFRs objective is to exchange selected internal information
to provide for a reliable, longer term future views of demand
in the supply chain.
CPFR uses a cyclic and iterative approach to derive
consensus forecasts.
4. PPC & PERT/CPM
Web-Based Forecasting:
Steps in CPFR
Intermediate Forecasting
& demand Sales and operations (aggregate) planning
range management
Sales plan Aggregate operations plan
Manufacturing
Services
Master scheduling
Long-range planning
Greater than one year planning horizon
Usually performed in annual increments
Medium-range planning
Six to eighteen months
Usually with weekly, monthly or quarterly increments
Short-range planning
One day to less than six months
Usually with weekly or daily increments
Now
Nowsuppose
supposethis
this 2000
lower
lowerfigure
figurerepresents
represents 0
the
theaggregate
aggregatecapacity
capacity Jan Feb Mar Apr May Jun
of
ofthe
thecompany
companyto to
9000
meet
meetdemand
demand 10000
8000
8000
What
Whatwewewant
wanttotodo
doisis 6000
6000
4500 4000
balance
balanceout
outthe
the 4000
4000
production
productionrate,
rate,
workforce
workforcelevels,
levels,and
and
2000
inventory
inventorytotomake
make 0
these
these figuresmatch
figures matchupup
Jan Feb Mar Apr May Jun
4. PPC & PERT/CPM
Required Inputs to the Production Planning
System
Competitors Raw material Market
behavior availability demand
External
to firm
External Economic
capacity Planning
conditions
for
production
Chase
Level
Jan F eb M ar A pr M ay Jun C os
M aterial 21,250.00 27,500.00 35,000.00 50,000.00 40,000.0030,000.00 203,750
Labor 5,627.59 7,282.76 9,268.97 13,241.38 10,593.10 7,944.83 53,958
H iring c os t 400.00 200.00 600.00 1,200
F iring c os t 750.00 500.00 250.00 1,500
4. PPC & PERT/CPM
260,408
Level Workforce Strategy (Surplus and
Shortage Allowed)
Lets
Letstake
takethe
thesame
sameproblem
problemasas
before
beforebut
butthis
thistime
timeuse
usethe
the
Level
LevelWorkforce
Workforcestrategy
strategy Jan
Demand 4 ,500
This
Thistime
timewe
wewill
willseek
seektotouse
use
aaworkforce level of 6 workers Beg. inv. 250
workforce level of 6 workers
Net req. 4 ,250
W orkers 6
P ro duction 6 ,380
Ending invento ry 2 ,130
Surplus 2 ,130
Shortage
4. PPC & PERT/CPM
Below
Below are
arethe
thecomplete
completecalculations
calculationsfor
for the
theremaining
remaining
months
months in
inthe
the six
sixmonth
month planning
planning horizon
horizon
Finished
product
Dependent
Demand
(Derived demand
items for
E(1 component
) parts,
subassemblies,
Component parts raw materials,
4. PPC & PERT/CPM
etc)
Inventory Systems
Single-Period Inventory Model
One time purchasing decision (Example:
vendor selling t-shirts at a football game)
Seeks to balance the costs of inventory
overstock and under stock
Multi-Period Inventory Models
Fixed-Order Quantity Models
Event triggered (Example: running out of
stock)
Fixed-Time Period Models
Time triggered (Example: Monthly sales call
by sales representative)
4. PPC & PERT/CPM
Single-Period Inventory Model
This
Thismodel
modelstates
statesthat
thatwe
we
Cu should
shouldcontinue
continueto toincrease
increase
P
the
thesize
sizeofofthe
theinventory
inventorysoso
long
longasasthe
theprobability
probabilityof
of
Co + Cu selling
sellingthe
equal
equalto
thelast
toor
lastunit
unitadded
orgreater
addedisis
greaterthan
thanthe
the
ratio
ratioof:
of:Cu/Co+Cu
Cu/Co+Cu
Where:
Co = Cost per unit of demandover estimated
Cu = Cost per unit of demand under estimated
P = Probability that theunit willbe sold
4. PPC & PERT/CPM
Single Period Model Example
Number
of units
on hand Q Q Q
R
L L
2. Your start using
them up over time. 3. When you reach down to
Time a level of inventory of R,
R = Reorder point
Q = Economic order quantity you place your next Q
L = Lead time sized order.
4. PPC & PERT/CPM 90
Cost Minimization Goal
By
Byadding
addingthe
theitem,
item,holding,
holding,and andordering
orderingcosts
costs
together,
together,we
wedetermine
determinethe
thetotal totalcost
costcurve,
curve,which
whichinin
turn
turnis
isused
usedtotofind
findthe
theQQopotpt inventory
inventoryorder
orderpoint
pointthat
that
minimizes
minimizestotal
totalcosts
costs
Total Cost
C
O
S
T Holding
Costs
Annual Cost of
Items (DC)
Ordering Costs
QOPT
4.Order Quantity
PPC & PERT/CPM (Q)
Basic Fixed-Order Quantity (EOQ) TC=Total
TC=Totalannual
annual
cost
Model Formula cost
DD=Demand
=Demand
Total Annual Annual Annual CC=Cost
=Costperperunit
unit
Annual = Purchase + Ordering + Holding QQ=Order
=Orderquantity
quantity
Cost Cost Cost Cost SS=Cost
=Costofofplacing
placing
an
anorder
orderororsetup
setup
cost
cost
RR=Reorder
=Reorderpointpoint
LL=Lead
=Leadtime
time
H=Annual
H=Annualholding
holding
D Q and
andstorage
storagecost
cost
TC = DC + S + H per
perunit
unitof
ofinventory
inventory
Q 2
4. PPC & PERT/CPM
Deriving the EOQ
Using
Using calculus,
calculus, we
we take
take the
the first
first derivative
derivative of of the
the
total
total cost
cost function
function with
with respect
respect toto Q,
Q, and
and set set the
the
derivative
derivative (slope)
(slope) equal
equal to
to zero,
zero, solving
solving for for the
the
optimized
optimized (cost
(cost minimized)
minimized) value
value of
of QQopotpt
Given
Given the
theinformation
information below,
below, what
what are
arethe
theEOQ
EOQ and
and
reorder
reorder point?
point?
_
Reorder p oint, R = d L = 2.74units / day (7days ) = 19.18 or 20 units
In
Insummary,
summary,youyouplace
placeananoptimal
optimalorder
orderof
of90
90units.
units. In
In
the
thecourse
courseof
ofusing
usingthe
theunits
unitsto
tomeet
meetdemand,
demand,when
when
you
youonly
onlyhave
have2020units
unitsleft,
left,place
placethe
thenext
nextorder
orderof
of9090
units.
units.
4. PPC & PERT/CPM
EOQ Example (2) Problem Data
Determine
Determine thethe economic
economic order
order quantity
quantity
and
and the
the reorder
reorder point
point given
given the
the following
following
_
R = d L = 27.397 uni ts / day (10 da ys) = 273.97 or 274 units
Place
Placean
anorder
order for
for366
366units.
units. When
Whenin inthe
thecourse
courseofof
using
usingthe
theinventory
inventoryyou
youare
are left
left with
withonly
only274
274units,
units,
place
placethe
thenext
next order
order of
of366
366units.
units.
4. PPC & PERT/CPM
Fixed-Time Period Model with Safety
Stock Formula
qq==Average
Averagedemand
demand++Safety
Safetystock
stockInventory
Inventorycurrently
currentlyon
onhand
hand
q = d(T + L) + Z T + L - I
Where :
q = quantitiy to be ordered
T = the number of days between reviews
L = lead time in days
d = forecast average daily demand
z = the number of standard deviations for a specified service probabilit y
T + L = standard deviation of demand over the review and lead time
I = current inventory level (includes items on order)
( )
T+ L 2
T+ L = di
i =1
Given
Given the
the information
information below,
below, how
how many
many units
units
should
should be
be ordered?
ordered?
Average daily demand for a product is
20 units. The review period is 30 days,
and lead time is 10 days. Management
has set a policy of satisfying 96 percent
of demand from items in stock. At the
beginning of the review period there are
200 units in inventory. The daily
demand standard deviation is 4 units.
4. PPC & PERT/CPM
Example of the Fixed-Time Period Model:
Solution (Part 1)
T+ L = (T + L) d =
2
( 30 + 10) ( 4) = 25.298
2
Because
Becausethe
thetotal
total annual
annual cost
costfunction
functionis
is
Total aau
ushaped
shapedfunction
function
annual
costs So
So the
thecandidates
candidates
for
forthe
theprice-
price-
breaks
breaks are
are 1826,
1826,
2500,
2500, and
and4000
4000
units
units
0 1826 25004. PPC4000 Order Quantity
& PERT/CPM
Price-Break Example Solution (Part 4)
Next, we plug the true Qopt values into the total cost
annual cost function to determine the total cost under
each price-break
D Q
TC = DC + S+ iC
Q 2
TC(0-2499)=(10000*1.20)+(10000/1826)*4+(1826/2)(0.02*1.20)
TC(0-2499)=(10000*1.20)+(10000/1826)*4+(1826/2)(0.02*1.20)
==Rs12,043.82
Rs12,043.82
TC(2500-3999)=
TC(2500-3999)=Rs10,041
Rs10,041
TC(4000&more)=
TC(4000&more)=Rs9,949.20
Rs9,949.20
q=M-I
Order Enough to
Refill Bin
Periodic Check 4. PPC & PERT/CPM
ABC Classification System
Items kept in inventory are not of equal
importance in terms of:
60
Rupees invested % of
Rs Value 30 A
profit potential 0 B
sales or usage volume % of 30 C
Use 60
stock-out penalties
Day: 1 2 3 4 5 6 7 8 9 10
A Required 50
Order Placement 50
LT = 1 day
LT = 2
Spares
A 4x50=200
B(4) C(2)
A
Part D: Day 6
B(4) C(2) 40 + 15 spares
MPS
(Specific End Items)
Moderately
Frozen Firm Flexible
Capacity
Forecast and available
capacity
Firm Customer Orders
8 15 26
Weeks
Aggregate Forecasts
Firm orders product of demand
from known plan from random
customers
customers
Material From
FromExhibit
Exhibit15.6
15.6
planning
Bill of (MRP Inventory
material computer record file
file program)
Secondary reports
Primary reports
Exception reports
Planned order schedule for Planning reports
inventory and production Reports for performance
control
4. PPC & PERT/CPM control
The McGraw-Hill Companies, Inc.,
Bill of Materials (BOM) File
A Complete Product Description
Materials
Parts
Components
Production sequence
Modular BOM
Subassemblies
Super BOM
Fractional options
4. PPC & PERT/CPM
Inventory Records File
Each inventory item carried as a
separate file
Status according to time buckets
Pegging
Identify each parent item that created
demand
4. PPC & PERT/CPM
Primary MRP Reports
Planned orders to be released at a future time
Order release notices to execute the planned
orders
Changes in due dates of open orders due to
rescheduling
Cancellations or suspensions of open orders
due to cancellation or suspension of orders on
the master production schedule
Inventory status data
Gross Requirements
Scheduled receipts
Net requirements
Requirements
Requirementsinclude
include95
95units
units(80
(80firm
firmorders
ordersand
and15
15forecast)
forecast)of
ofXX
in
inweek
week10
10
22As
Asfor
for
C
LT=2
Gross requirements
Scheduled receipts
45 40
each
eachXX On-
Proj. avail. balance
Net requirements
10 10 10 10 10
35 40
hand Planned order receipt 35 40
10 Planner order release 35 40
D Gross requirements 100
LT=2 Scheduled receipts
Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80
hand Planned order receipt 80
20 Planner order release 80
ItIttakes
takes
hand
25
Planned order receipt
Planner order release 20
20
11BBfor
C Gross requirements 45 40
for LT=2 Scheduled receipts
Proj. avail. balance 10 10 10 10 10
each
eachXX On-
hand
Net requirements
Planned order receipt
35
35
40
40
10 Planner order release 35 40
D Gross requirements 100
LT=2 Scheduled receipts
Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80
hand Planned order receipt 80
20 Planner order release 80
Cs
Csforfor
D
LT=2
Gross requirements
Scheduled receipts
100
each
eachAA On-
Proj. avail. balance
Net requirements
20 20 20 20 20 20 20
80
hand Planned order receipt 80
20 Planner order release 80
Cs
Csforfor
D
LT=2
Gross requirements
Scheduled receipts
100
each
eachBB On-
Proj. avail. balance
Net requirements
20 20 20 20 20 20 20
80
hand Planned order receipt 80
20 Planner order release 80
Ds
Dsforfor
D
LT=2
Gross requirements
Scheduled receipts
100
each
eachBB On-
Proj. avail. balance
Net requirements
20 20 20 20 20 20 20
80
hand Planned order receipt 80
20 Planner order release 80
No
Realistic? Feedback
Feedback
Yes
Execute:
Capacity Plans
Material Plans
Answer: e. Process
4. PPC & PERT/CPM 147
Question Bowl
Process Flowcharting
Types of Processes
Flows of Examples:
Examples: Customers
Customers
materials or moving
moving to toaa seat,
seat,
customers mechanic
mechanicgetting
gettingaa
tool,
tool, etc.
etc.
Go to Yes
Drive to Walk to
school school class
today?
No
Goof
off
Single-stage Process
Stage 1
Multi-stage Process
Make-to-order
Only activated in response to an actual order
Both work-in-process and finished goods
inventory kept to a minimum
Make-to-stock
Process activated to meet expected or
forecast demand
Customer orders are served from target
stocking level
4. PPC & PERT/CPM
Process Performance Metrics
Throughput rate = 1 .
Cycle time
Productivity = Output
Input
Suppose
Suppose you
you had
had to
to produce
produce 600
600 units
units in
in 80
80 hours
hours
to
to meet
meet the
the demand
demand requirements
requirements ofof aa product.
product.
What
What is
is the
the cycle
cycle time
time to
to meet
meet this
this demand
demand
requirement?
requirement?
Answer:
Answer: There
There are
are 4,800
4,800 minutes
minutes (60(60
minutes/hour
minutes/hour xx 80
80 hours)
hours) in
in 80
80 hours.
hours. So So the
the
average
average time
time between
between completions
completions would
would have
have
to
to be:
be: Cycle
Cycle time
time == 4,800/600
4,800/600 units
units == 88 minutes.
minutes.
Reduce interruptions
1 2 3
a. Single-stage process
b. Multi-stage process
c. Make-to-order process
d. Make-to-stock process
e. All of the above
Internal Supplier
Internal
Customer
External
Customer
Internal Supplier
4. PPC & PERT/CPM
Exhibit
Exhibit7.1
7.1
The The
Systems People
4. PPC & PERT/CPM
Service Strategy: Focus and Advantage
Performance Priorities
Treatment of the customer
Speed and convenience of service delivery
Price
Variety
Quality of the tangible goods
Unique skills that constitute the service
offering
4. PPC & PERT/CPM
Service-System Design Matrix
Exhibit
Exhibit7.6
7.6
Degree of customer/server contact
Buffered Permeable Reactive
High core (none) system (some) system (much) Low
Face-to-face
total
customization
Face-to-face
Sales loose specs Production
Face-to-face
Opportunity Efficiency
tight specs
Phone
Internet & Contact
on-site
Mail contacttechnology
Low High
2. It is user-friendly
3. It is robust
7. It is cost-effective
Finite loading
Forward scheduling
What
Whatis
isthe
theSOT
SOTschedule? Do
schedule? Doall
allthe
thejobs
jobsget
getdone
doneon
ontime?
time?
Answer: Shortest Operating Time Schedule
Jobs (in order Processing Due Date Flow Time
No,
No,Jobs
JobsAA
of arrival) Time (days) (days hence) (days)
and
andBBare
are
D 1 4 1 going
C 3 6 4 goingtotobe
be
late
late
A 4 5 8
B 7 10 15
4. PPC & PERT/CPM
Example of Job Sequencing: Earliest Due
Date First
Jobs (in order Processing Due Date
Suppose
Supposeyouyouhave
havethe
thefour
four of arrival) Time (days) (days hence)
jobs
jobsto
tothe
theright
rightarrive
arrivefor
for A 4 5
processing
processingon onone
onemachine
machine B 7 10
C 3 6
D 1 4
What
Whatis isthe
theearliest
earliestdue
duedate
date
first
firstschedule?
schedule? Do
Doall
allthe
thejobs
jobsget
getdone
doneon
ontime?
time?
Answer: Earliest Due Date First
Jobs (in order Processing Due Date Flow Time No,
No,Jobs
JobsCC
of arrival) Time (days) (days hence) (days) and
andBBare
are
D 1 4 1 going
goingtotobe
be
A 4 5 5 late
late
C 3 6 8
B 7 10 15
4. PPC & PERT/CPM
Example of Job Sequencing: Critical Ratio
Method
Jobs (in order Processing Due Date
Suppose
Supposeyouyouhave
havethe
thefour
four of arrival) Time (days) (days hence)
jobs
jobsto
tothe
theright
rightarrive
arrivefor
for A 4 5
processing
processingon onone
onemachine
machine B 7 10
C 3 6
D 1 4
What
Whatisisthe
theCR
CRschedule? Do
schedule? Doall
allthe
thejobs
jobsget
getdone
doneon
ontime?
time?
What
Whatis
isthe
theLCFS
LCFSschedule? Do
schedule? Doall
allthe
thejobs
jobsget
getdone
doneon
ontime?
time?
Answer: Last-Come First-Served Schedule
Jobs (in order Processing Due Date Flow Time
of arrival) Time (days) (days hence) (days) No,
No,Jobs
JobsBB
D 1 4 1 and
andAAare
are
C 3 6 4 going
goingtotobe
be
B 7 10 11 late
late
A 4 5 15
4. PPC & PERT/CPM
Example of Job Sequencing: Johnsons
Rule (Part 1)
Suppose
Suppose you
you have
havethe
thefollowing
followingfive
fivejobs
jobswith
withtime
time
requirements
requirementsin
intwo
twostages
stagesof
ofproduction.
production. What
What is
isthe
the
job
jobsequence
sequenceusing
usingJohnsons
JohnsonsRule?
Rule?
Time in Hours
Jobs Stage 1 Stage 2
A 1.50 1.25
B 2.00 3.00
C 2.50 2.00
D 1.00 2.00
Drop D out, select the next smallest time (Job A), and place it 4th in the job
sequence.
Drop A out, select the next smallest time. There is a tie in two stages for
two different jobs. In this case, place the job with the smallest time in the
first stage as early as possible in the unfilled job sequence.
Then place the job with the smallest time in the second stage as late as
possible in the unfilled sequence.
Job Sequence 1 2 3 4
Job Assigned 4.DPPC & PERT/CPM
B C A
Shop-Floor Control:
Major Functions
Work
Input Output
Center
The resources and skills required are multi-faceted. Sometimes, they are
unique to the specific project.
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Time Horizontal
HorizontalAxis:
Axis: Always
AlwaysTime
Time
4. PPC & PERT/CPM
Pure Project
A pure project is where a self-contained team
works full-time on the project
Research and
Engineering Manufacturing
Development
Example,
Example, Project
Project B B is
is in
in the
the functional
functional
area
area of
of Research
Research and
and Development.
Development.
4. PPC & PERT/CPM
Structuring Projects
Functional Project: Advantages
A team member can work on
several projects
Technical expertise is maintained
within the functional area
The functional area is a home
after the project is completed
Critical mass of specialized
knowledge
4. PPC & PERT/CPM
Structuring Projects
Functional Project: Disadvantages
President
Research and
Engineering Manufacturing Marketing
Development
Manager
Project A
Manager
Project B
Manager
Project C
4. PPC & PERT/CPM
Structuring Projects
Matrix: Advantages
Pinpointed responsibility
Level Program
1 Project 1 Project 2
Activity time In PERT there is concept of optimistic (O), most likely (M), pessimistic (P)
and expected times (E). E = [ (O+4M+P) / 6 ]
Critical Path The path that determines the duration / completion of the project, and
hence must the focus of attention. .
Slack When an activity can be delayed, without affecting project completion
time.. Activities on the critical path have no slack.
Float Is the amount of slack available. There are 4 types of float i.e.
TOTAL FLOAT, FREE FLOAT, INTERFERING FLOAT & INDEPENDENT
FLOAT
B
G
A
C F
D
B 10
A 3 D
4
14 C
Job
Key
Duration
A E
C E
B F
C E
A None 2
B A 1
C B 1
D C 2
E C 5
F D,E 5
D(2)
G F 1
E(5)
4. PPC & PERT/CPM
Determine early starts and early finish times
ES=4
EF=6
LS=4
LF=9
4. PPC & PERT/CPM
Critical Path & Slack
ES=4
Slack=(7-4)=(9-6)= 3 Wks
EF=6
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
B None 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28
4. PPC & PERT/CPM 278
Example 2. Expected Time
Calculations
ET(A)=
ET(A)=3+4(6)+15
3+4(6)+15
Immediate Expected 66
Task Predecesors Time
A None 7 ET(A)=42/6=7
ET(A)=42/6=7
B None 5.333
C A 14 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
D A 5 A
B
None
None
3
2
6
4
15
14
E C 11 C
D
A
A
6
2
12
5
30
8
F D 7 E C 5 11 17
F D 3 6 15
G B 11 G B 3 9 27
H E,F 1 4 7
H E,F 4 I G,H 4 19 28
I G,H 18
Opt. Time + 4(Most Li kely Time) + Pess. Time
Expected T ime =
4. PPC & PERT/CPM 6 279
Ex. 2. Expected Time Calculations
G B 11 D
E
A
C
2
5
5
11
8
17
H E,F 4 F
G
D
B
3
3
6
9
15
27
I G,H 18 H
I
E,F
G,H
1
4
4
19
7
28
Duration = 54 Days
C(14) E(11)
A(7) H(4)
D(5) F(7)
I(18)
B G(11)
(5.333)
4. PPC & PERT/CPM 282
Example 2. Probability Exercise
What
What isis the
theprobability
probability of
of finishing
finishing this
this project
project in
in
less
less than
than 53
53 days?
days?
p(t < D)
D=53
t
TE = 54
D - TE
Z =
cp
2
t
D=53 TE = 54
D - TE 53 - 54
Z = = = -.156
cp
2 41
p(Z
p(Z<< -.156)
-.156) == .438,
.438, or
or 43.8
43.8 %
% (NORMSDIST(-.156)
(NORMSDIST(-.156)
There
There isis aa 43.8%
43.8% probability
probability that
that this
this project
project will
will be
be
completed
completed in in less
less than
than4.53
53 weeks.
PPC &weeks.
PERT/CPM 285
Ex 2. Additional Probability Exercise
What
What is
is the
the probability
probability that
that the
the
project
project duration
duration will
will exceed
exceed 56 56
weeks?
weeks?
p(t < D)
t
TE = 54
D=56
D - TE 56 - 54
Z = = = .312
cp
2 41
p(Z
p(Z >> .312)
.312) == .378,
.378, or
or 37.8
37.8 %
% (1-NORMSDIST(.312))
(1-NORMSDIST(.312))
4. PPC & PERT/CPM
Time-Cost Models
Crashed
Cost
Normal
Point
Normal
Crashed Normal
Activity Duration
4 B 5 5 D 9 9 E 11
Res = 2 Res = 7 Res = 3
1. Start with a
0 A 4 network diagram
Res = 6 11 F 12
Res = 6
4 C 7
Res = 2
4. PPC & PERT/CPM 306
Resource Loading Charts
Activity Resource Duration ES Slack LF
A 6 4 0 0 4
B 2 1 4 0 5
C 2 3 4 4 11
D 7 4 5 0 9
E 3 2 9 0 11
F 6 1 11 0 12
6
Resource
4 imbalance
A D F
B
2 E
C
2 4 6 8 10 12 14
Project Days
4. PPC & PERT/CPM 308
Resource Loading Charts
4. Rearrange activities within their slack
to create a more level profile. Splitting
8 C creates a more level project.
Resources
4 C
A D F
B
2 E
C
2 4 6 8 10 12 14
Project Days
4. PPC & PERT/CPM 309
Resource Loading Chart
Explain how production control functions are carried out in Mass Production (Give examples).
Given data for a project
a) Draw the Network Diagram for the Project.
b) Determine the critical path and its duration.
c) Compute slack, earliest start time & earliest finish time.
Narrate the functions of production Planning and control. Explain their objective clearly .
'Production, planning and control function involves balancing between Priority' (Demand) and
capacity (Resources)'. Discuss the statement.
Compare CPM and PERT method for project management. What do you understand by 'Network
crashing'?
Explain those functions of Production Planning & Control which enable a company to control cost
of Production & Capacity utilization.
What are the objectives of Production Planning and control. Enlist functions of Production
Planning and Control.
"Project control should always focus on critical path" comment.
The activities of a project and estimated time in days for each activity are given
below:
Activity Optimistic Most Likely Pessimistic
Time Time Time
1-2 2 5 8
1-4 4 19 28
1-5 5 11 17
2-3 3 9 27
2-6 3 9 15
3-6 2 5 14
4-6 3 6 15
5-7 1 4 7
5-8 2 5 14
6-8 6 12 30
7-8 2 5 8
a) Determine expected time for each activity.
b) Draw Network Diagram and determine critical path.
c) Calculate project duration and slack for each activity.