UNIT II 11.2.

2019
SYLLABUS:
(2.1 ) PPC(Production Planning& Control)(PPC) & Stages in PPC,
(2.2) Aggregate Planning,
(2.3) Basics of Project management,
(2.4) Concept of Maintenance Management

OM : Pertains to both (I) manufacturing operations (II) service operations

In terms of; ‘What’, ’where’, ’why’, ’who & ‘when’(the 5W’s) besides “how”&‘how-else’(the 2 h’s) etc.
so as,to result in maximum value addition to
The consumer of product /service.

(2.1)
PPC(PRODUCTION PLANNING& CONTROL) & STAGES IN PPC…..Text Book Pp 469 to 489

Forecasting is the main base for PPC. ………………………………..Text Book Pp 571 to 606
(i)Statement about future.
(ii)It is the First step in Planning

Demand forecasting:
Estimate of the future demand for products or services are commonly referred to as Sales
Forecasts/Demand Forecasts, which are the starting point for the entire planning in production and
operations management .
Foe eg, material planning, capacity planning, man power planning, financial planning and production
scheduling, all depend on Sales/Demand Forecasting.

Methods:
Quantitative (objective type):

(i)Time series models: naïve approach (2,4,5 , ? , 5),

(ii)Moving Average method ((Say) 3 Periods) ( 2, 5, 6, 8, ? , ? ) 4.33, 6.33 ,

(iii)EXPONENTIAL SMOOTHING METHOD:

It requires only 3 items of Data: this period‟s Forecast, The actual Demand for this period and Alpha.
Next period‟s Forecast= This Period‟s Forecast + Alpha( This Period‟s Actual Demand - This Period‟s
Forecast),
Alpha ranges commonly from 0.05 to 0.50.
Eg: Let this period‟s Forecast, The actual Demand for this period and Alpha be
8, 7 & 0.2. What is next period‟s Forecast?
Next period‟s Forecast = 8 + 0.20*(7-8) = 7.80

(iv)Causal Models: Trend projection, Linear regression Analysis ,Semi Average Methods etc
2 Common Methods: Linear Regression Method & Semi_Average Methods

(v)Time Series Method : TCSR Method(Trend,Cyclicity, Seasonality & Randomness as Components)

(vi) DELPHI Method

SOME COMMON METHODS:

Forecasting- examples- Linear regression method

F/casting          
Regression
Linear method     computations
b=(( Sigma(x*y) -n*xavg* yavg ) /
(sigma (x2)- n*xavg2 )

=
(1000-6*5*30 ) / (200-6*5*5)
x is
independen =
dent 100 / 50 = 2.0
y= a+b * x variable    
a= (yavg - b * xavg)
= 30 – 2 * 5
= 30 -10
          = 20
Period x y x*y X2
  (Res Expr) (Profit)    
1 2 20 40 4
2 3 25 75 9  
3 5 34 170 25
4 4 30 120 16
5 11 40 440 121
6 5 31 155 25
Total 30 180 1000 200  
Average 5 30    
         
7 6 ? (Question)      
y=a+b*x,

y= 20 + 2 *
x
Equation      
y=20+2*7=
34
Answer        
Forecasting- examples- semi-average method
 F/castin        
g
Semi average   computations
Method
y=a+b*x x is Y is    
independendent dependant
variable variable
Period Sales Semi total Semi Avg  
(for 3 years) TrendValue
x  y
1997 39    
1998 48 152 152/3=50.67 a=50.67
1999 65    
2000 78    
2001 95    
2002 91 298 298/3=99.33 b=(99.33-50.67) / (2002-
1998) = 48.66/4
= 12.165
2003 112      
Avg        
     
2004 ? (question)      
Equation y=a+b*(x-1998),    
where x=2004
     
Answer y=50.67+12.165*6    
=123.66
=124
QUALITATIVE (Judgemental Type):
Jury method .Judgemental
method (DELPHI METHOD) ,
Sales composite method, Market Research method, Others
Forecasting- Delphi Method
For forecasting items of subjective nature,Panel members are to be unknown to each others;Egs:
Technology forecasting, forecasting demand in international competition
Mc language, 1st generation languages(Assembly language), 2nd generation languages(High level
language), 3rd generation languages(Lotus1-2-3), 4 th generation languages(oracle..);Consensus,
otherwise, re-circulate findings to those whose estimates vary by + or -50% of majority finding.
CASE EXAMPLE ON PPC :PRINTING PRESS PROBLEM (Eg ON PPC)
A printing company’s data.
The Co., works on one shift basis ( 8 AM to 4.30PM, with half an hour Lunch break
Business Purpose : Receiving work orders for Text books and Pamphlets/Brochures &
Printing&Despatching to customer.
Products: Text books of 1000 pages (high profit margin) , One page Pamphlets / Brochures Of different
sizes (low profit margin)
RESOURCES:
(i)Machines &Man Power & Their Capacity: Big Printing Machine ( for Text books) : 600
pages/hour);
Small Printing Machine ( for Pamphlets ) : 100 Nos./hour) ;
Cutting ,Trimming&Binding Machine : 5 Books/hour; (Cutting ,Trimming &Binding is not required for
Pamphlets/Brochures ) , Packing and dispatching of Books : 200 Nos./person/Day ;
Packing and dispatching of Pamphlets/Brochures : 1000 Nos./person/Day,
Sales Forecast: : 4500 Books (each of 1000 pages)/year,
5,00,000 Pamphlets/Brochures /year.
To be Worked out :
(1) Sequence of operations,
(2) Production capacities
(3) Machineries & Man power Required
&(4) Comments
Solution :
(1)Sequence of operations:
For Books: (i)Printing (ii) Cutting ,Trimming & Binding & (iii)Packing and dispatching (3 Activities as
per this sequence) (Note:First 2 activities fall under category of Machine Operations and the last one
comes under Manual Operation)
For Pamphlets/Brochures :- (i)Printing (ii)Packing and dispatching…..2 Activities as per this sequence.
(Note:First 2 activity falls under category of Machine Operation and the second one comes under Manual
Operation)
2)Production capacities:
2.1:Production capacities for Books printing : 600 pages/hour (= 0.6 Book/Hour), 8*600=4800
pages/Shift(Day) (=4.8 Books/day) , 4800 X 25= 120000 Pages/month (=120Books / month),
120000 X 12= 1440 000 pages / year
(= 1440 nos.of Books printing / Year)
(Note: The press operates for 1 shift /day. Hence, 1 shift means a day. There are 25 days/ month.& 25 X
12=300 days/Year)
2.2:Production capacities for Books Cutting ,Trimming & Binding : 5 nos./hour, 5X8=40
Nos/Shift(Day) ,40X 25= 1000 nos./month ,1000X12
= 12000 nos. of CTM of Books / year
2.3: Production capacities for Packing and dispatching of Books :200 nos./person/Day ,
200 X 25= 5000 nos./month, 5000 X 12
= 60000 nos. 0f P&D of Books / year
2.4Production capacities for Pamphlets/Brochures printing : 100 nos./hour, 100X8=800
nos./Shift(Day) ,800 X 25….= 20000 nos./month, 20000 12
= 240 000 nos. of P& Bs Printing/ year

2.5: Production capacities for Packing and dispatching of Pamphlets/Brochures : 1,000

nos./person/Day,1000 X 25 = 25000 nos./month, 25000 X 12
=300 000 nos. OF P&D of P&Bs / year
3.0 Machineries & Man power Required:
(I)MACHINERIES REQUIRED:
(a)Big Printing Machines(BPM) ( for Text books): 4500 / 1440
= 3. 125 Nos.
(b)Cutting ,Trimming& Binding Machine(CTBM)(for Text books) : 4500 / 12000
= 0. 375 Nos.
(c)Small Printing Machine(SPM)(for Pamphlets/Brochures) = 500 000/ 240 000
= 2.083 Nos.
ADD………………………….3.125+0.375+2.083=5.583
----------------------------------- = 4.000+1.000+3.000=8.000…ALT-I,( UtlnI%=5.583X100/8=69.79%)
---------------------------------- = 3.000+1.000+2.000=6.000…ALT-II, (UtlnII%=5.583X100/6=93.05%)
(II)MAN POWER REQUIRED:
(d)Labourers For Packing and dispatching(P&D)(P&D) of Books : 4500/ 60 000
= 0.075
(e)Labourers For Packing and dispatching of Pamphlets / Brochures : 500 000/ 300 000
= 1.667
ADD………………………….0.075+1.667 =1.742
----------------------------------- = 1.000+2.000 =3.000…ALT-I,( UtlnI%=1.742X100/3=58.06%)
------------------------------------ =0.000+2.000=2.000=…ALT-II, (UtlnII%=1.742 X100/2=87.01%)
And also Labourers (Operators ) to Operate the 3 types of Machines.
Total Labour……………….. = 8+3=11…….Alt I
------------------------------------- = 6+2= 8…….Alt II
No., of Machineries & their Utilization %
ALTERNATIVE (I) :
(I)MACHINES REQUIRED:
(a)Big Printing Machines(BPM) : 3.125 Nos=4 Nos.(Say-Provided) , Utilization (=3.125X100) /4 % =
78.125%
(b) C.T.B.M : 0.375 Nos=1 No.,(Say-Provided) , Utilization (=0.375X100)/1 %= 37.5%
(c) Small Printing Machines(SPM) : 2.083 Nos=3 Nos.(Say-Provided) , Utilization (=2.083 X100)/3
%=69.433%
(CHECK: Grand Total of Machines ( Total System Perspective): 3.125+0.375+2.083=5.583, (Say-
Provided) 4+1+3=8 Nos,U=(5.583X100)/8= 69.787 %
(II)MAN POWER REQUIRED :
(d)(Labour for Books for P&D) : 0.075 Nos= 1 (Say-Provided), Utilization (=0.075X100)/1 %= 7.5%
(e)Labour for Pamphlets for P&D) : 1.667 Nos= 2 (Say-Provided), Utilization (=1.667X100)/2 %=
83.35%
AND ALSO ADD
(f)(Labour)Operators for Big Printing Machines(BPM) : 3.125 Nos=4 Nos.(Say-Provided) , Utilization
(=3.125X100)/4 %= 78.125%
(g)(Labour)Operators for C.T.B Machine : 0.375 Nos=1 No.,(Say-Provided) , Utilization (=0.375X100)/1
%= 37.5%
(h)(Labour)Operators for Small Printing Machines(SPM) : 2.083 Nos=3 Nos.(Say-Provided) , Utilization
(=2.083 X100)/3 %=69.433%
(CHECK: Grand Total of Man Power (Total System Perspective) :
0.075+1.667+3.125+0.375+2.083=7.325, (Say-Provided) 1+2+4+1+3=11 Nos,U=(7.325X100)/11=
66.591 %
Note : (i)BPM,CTBM &SPM are called Man_Machine Systems, as each Machine needs a Man alas
to Operate it.
(ii) P&D for Books and Pamphlets and Brochures is Purely Manual Operation.
4.0 COMMENTS: Conclusions ? ALTERNATIVE (II) : Can a better Alternative be evolved ?
PPC:

Planning: Devising future course of action in advance to realize organizational objectives. It is dynamic
and continuous
Planning varieties:
Strategic (by top management)/ Tactical (by middle management/ operational (by lower level
management)
Respective examples:
Strategic:Plant or Factory/Service Facility- where to locate; production - how to do;
Tactical:product range –what ,plant layout, pricing, maintenance policy, budget, make components or
buy?
Operational: decisions/price discount at field level, maintenance details, man power allocation, production
schedule, inventory control…
Production System is sequence of operations resulting in Output of Product / Service with right
Quantity, Quality , at Required Time, using Best Method & at Cheapest Cost.

PPC is nerve centre for Production System

STAGES IN PPC:
1.PLANNING: The Choice from SEVERAL ALTERNATIVES of the best means of utilizing the
resources available to achieve the desired OBJECTIVES IN THE MOST EFFICIENT AND ECONOMIC
MANNER.
2.OPERATIONS: Performance in accordance with the details set out in the PRODUCTION PLAN.
3.CONTROL: The monitoring of performance through a feed back by comparing results achieved with
planned targets so as to improve performance through corrective actions .

Hence, PPC may be defined as planning, direction and coordination of the firm’s materials and physical
facilities to meet predetermined objectives in the most economical manner.
PPC can also be referred as Operations planning& Control.

STEPS / CLASSIFICATION OF PPC FUNCTIONS:

1.Materials : Making available, Quantity ,Time
2.Methods: Methods & Sequencing by Work Study
3.Machines& Equipment: Selection & Using these.
4.Routing: Prescribes the Flow of work in the plant considering layout ,Storage locations for RMs, WIP&
FGs. Routing is a basic PPC Function.
5.Estimating: of Processing times( set up time & Operation Time) and standard times are established for
monitoring performance standards.
6. Loading & scheduling: Mc Loading is in accordance with ROUTING. Scheduling is determining
starting and finishing time schedule for various jobs on various Equipment for optimum machine
utilization.
7. Dispatching:It authorizes the start of operations. Production orders and instructions are released
according to schedule, sequences indicated in route sheets and machine loading schedules are adhered to
and authorization is given for release of materials and tools to operators to carry out the work.
8. Expediting Or Progressing: This makes follow-up. This follows Dispatching Function. Dispatching
initiates action on the shop floor and Expediting ensures that schedules are adhered to. It gives feed back
to PPC Manager and Production/Operations Manager.
9. Inspection :Quality in production as well as that of processes.
10.Evaluating or Controlling: The objective is to improve performance. Methods & Facilities are
evaluated to improve their Performance. )
ANOTHER APPROACH:
PRODUCTION PLANNING SYSTEM:
= Product planning & its Process planning Subsystem
PRODUCTION CONTROL:
Provides parts , Components etc at required quality, quantity & time.
Elements Involved : Control of Planning, Materials, Tooling, Manufacturing capacity, Activities ,Quality,
Materials Handling, Due Delivery Dates & Control of Information.
PPC IN DIFFERENT PRODUCTION S YSTEMS:
1. Job Production: Eg: Manufacturing Generators, ships, cranes etc.
Difficulties: Each job order is different, No Regular repetition
2.Batch Production: authorizes the start of operations is to be done carefully.
3.In Continuous Production systems: Simpler & in Process Industry: Relatively Simple.
FACTORS DETERMINING PRODUCTION PLANNING PROCEDURES:
1.Volume of Production,2.Nature of production(Mass/Job)& 3.Nature of Production( In Flow Type :
Easy), 4.Complexity of Operations in Totality
1.PRIORITY SEQUENCING:
When a machine or work centre becomes free, the job with highest priority is assigned. Basis: FCFS,
Shortest processing time job first, Longest processing time job, Least slack Job,Earliest Due Date job,
Preferred Customer Order ,etc .
2.DYNAMIC SEQUENCING RULES:
JOHNSON’S RULE ( N JOBS THROUGH , 2WORK CENTRES(W.Cs)):
Estimated Processing Time(Hours) , n jobs, for 2 work centres, wc1 & wc2
Job WC1 WC2
A 2.0 1.0
B 4.0 2.25
C 0.75 2.5
D 1.5 3.0
E 2.0 4.0
F 2.0 3.5

Preferred sequence : Solution:

C D E F B A

JOHNSON’S RULE (N JOBS , 3 MACHINES) :

Estimated Processing Time(Hours) ,n jobs, for 3 work centres, wc1,wc2&wc3
Note: Smallest duration on wc1 and also wc3 is at least as great as the largest duration on wc2 . ……
STEP 1:
jOB WC1 WC2 WC3
A 12 6 10
B 6 4 8
C 7 5 6
D 8 3 7
STEP2:
JOB WC1 + WC2 WC3 + WC2
A 18 16
B 10 12
C 12 11
D 11 10

Preferred sequence : Solution:

A C D B
Calculation of Cumulative flow time and Idle Time
Use of Table :

Job WC1 WC2

Duratio In time Out Remark Durati In Out Remarks
n time s on time time
C 0.75 0.00 0.75 2.50 0.75 3.25 Waiting upto 0.75
D 1.50 0.75 2.25 3.00 3.25 6.25
E 2.00 2.25 4.25 4.00 6.25 10.25
F 2.00 4.25 6.25 3.50 10.25 13.75
B 4.00 6.25 10.25 2.25 13.75 16.00
A 2.00 10.25 12.25 1.00 16.00 17.00
Tota 12.25 16.25
l

Cycle time is from 0.00 to 17.00 = 17.00 minutes

Output Rate = 60/17 = 3.529

Suppose any other sequence is followed (Say; A,B,C,D,E,F.The computations are as follows.

Job WC1 WC 2
Duratio In time Out Remarks Duratio In Out Remarks
n time n time time
A 2.00 0.00 2.00 1.00 2.00 3.00 Waiting
Upto 2.00
B 4.00 2.00 6.00 2.25 6.00 8.25 Waiting
from 3.00
upto 6.00
C 0.75 6.00 6.75 2.50 8.25 10.75
D 1.50 6.75 8.25 3.00 10.75 13.75
E 2.00 8.25 10.25 4.00 13.75 17.75
F 2.00 10.25 12.25 3.50 17.75 21.25
Tota 12.25 16.25
l

Cycle time is from 0.00 to 21.25 = 21.25 minutes

Output Rate = 60/21.25 = 2.823 ,which reduced compared to EARLIER OPTIMUM SEQUENCE of
CDEFBA
ADDITIONAL INFORMATION ON PPC :

PPC METHODS AT SHOP FLOOR:

For Intermittant type of Production System :

1.Batch Scheduling ( EBQ)(Economic Batch Quantity)
2. As per Promised delivery schedule(Line of balance Method)

For High Volume Production systems:

1.Line Balancing Methods

PPC-another dimension,
Planning/Action/Control
Planning (What, How):
Optimal schedule, sequencing operations, E.B.Q(Economic Batch Quantity) determination, Despatching
priorities.

Pre Planning;
Forecasting, product design,aggregate planning,master prodn schedule(product wise),order writing for
authorizing,mrp for dependent items

Active Planning ;
Process planning, routing, materials planning,tools planning,loading(mc assigning) & scheduling
( different o.r.techniques, what products&when,what qnty&when,what resources&when, considering
feasibility constraints of resources & technological factors for determining sequence determination & start
and finish time)

Action (What, How):

Guide lines for plans implementation like Dispatching (Worker ordered to start mfg, through job order,
stores order, tool order, time ticket, move order..)

Control (What, How) ;

Control of production system, feed back& FOLLOW – UP (Through progress reporting & corrective
action & Expediting)
(2.2)
AGGREGATE PLANNING……………………Text Book pp404 to 427)
Companies have to invest in people ,technology, R&D & capital assets in order to remain in business &
flourish.
Strategic planning requires a long term capacity plan , necessary for meeting future demands.
Co’s success depends on such built-up capacity.

Aggregate Planning :
It involves planning the best quantity to produce during time periods in the intermediate range
horizon( Like, 3 months to 1 year) & planning the lowest cost method for the adjustable capacity to
accommodate the production requirements.
Aggregate Planning involves planning work force size, production rate ( in terms of necessary no., of
work hours per week) and managing inventory levels.
operations Planning and Scheduling Systems are concerned with the volume and timing of outputs, the
utilization of operations capacity and balancing outputs with capacity at desired levels of competitive
effectiveness.
Operations Planning and Scheduling Systems,

Business Plan
Operations

Operations Planning and Scheduling Systems

• Output Planning ………………………………..……....Capacity Planning
• Aggregate output planning <………………………….> Aggregate Capacity planning
• “leads to”
• Master production
• Scheduling (MPS)<…………………………………….>Rough-cut Capacity planning
• “leads to”
• Material requirement Planning (MRP)<……….>Detailed Capacity planning
• “leads to”
• Loading
• “leads to” <………………..Shop floor control<…………Short term capacity control
• Sequencing
• “leads to”
• Detailed Scheduling
• “leads to”
• Expediting

Inputs to and Outputs from Aggregate Production Planning

Inputs Outputs
Strategic Objectives, Size of work force,
Co., policies, Production Rate (Units/month etc.,),
Demand forecasts, Inventory levels,
Capacity constraints, Units sub contracted,
Financial constraints back-ordered or lost
Steps for Aggregate Planning
1)Determine the Demand ( i.e sales forecast) for each product for each time period(i.e., weeks or months
or quarters) over the planning horizon(6 to 12 months)
2)Determine Aggregate Demand by summing up the demand for individual products.
3) Transform Aggregate Demand for each time period into workers, materials, machines required to
satisfy aggregate demand.
4) Identify Pertinent Company Policies ( on safety stock, stable work force, over time, sub-contracting
etc.,)
5)Determine Unit Costs for regular time, over time, sub-contracting, holding inventories, back orders, lay-
offs etc.,
6)Develop Alternative Resource Plans for providing necessary production capacity to support the
CUMULATIVE aggregate demand and compute the cost of each alternative plan.
7)Select the Resource plan from the Alternatives considered that satisfies Aggregate demand and Best
meets the Objectives of the Firm.

Approaches for Aggregate Planning

Top down approach.
Bottom up approach

Master Production schedule (mps)

MPS sets the quantity of EACH END ITEM (FINISHED PRODUCT) to be completed in each time
period of the short range planning horizon.
MPS s are developed by reviewing market forecasts, customer orders, inventory levels, facility loading
and capacity information regularly.
The MPS is a plan for future production of end items over a short-range planning horizon that usually
spans from a few weeks to several months. It is an important link between marketing and production.

Objectives of MPS:
1) To schedule end items to be completely promptly and when promised to customers
2) To avoid over loading or under loading the production facility so that production capacity is efficiently
utilized and low production cost result.

Method of MPS:
Computerized systems

Aggregate Planning – Simple Example

Example :

Rajasthan saris is a 100% export organisation located at Jaipur.Its sales agency is in Zurich.
In the last week of October, the sales agency provided a forecast of 2000 saris for NOVEMBER.In the last
week of November, it provided the forecast of 3000 saris for DECEMBER. (i.e forecast is done,1 month
in advance.

In October there are 25 workers. Each worker produces 100 saris/month.Salary = Rs 4000 /worker/month.
The co. follows hiring and lay –off policy. The hring cost, including training is Rs 500/person.Thelay off
cost is 20% of the monthly salary( 20 % of 4000= 800/person).The Inventory carrying cost is Rs
10/sari/month.

(Q1)Prepare aggregate plan.(Q2) Suppose the forecasts for the 2 months is known in advance, prepare the
AP.
Qn 1:
Item For Nov Month For Dec Month Total cost,Rs
Units required (Nos.) 2000 3000 5000

Workers on rolls in 25
October (Nos.)

Workers required(Nos.) 2000/100=20 3000/100=30 50

Salary (Rs) 20X4000=80000 23X4000=120000 200000

Workers to be Nil 30-20=10 10

Hired (Nos.)
Hiring cost(Rs) Nil 10 X 500=5000 5000

Workers to be 25-20=5 5
Laid off (Nos.)

Lay off cost (Rs) 5 X800=4000 4000

Net total cost (Rs) 5000+4000=9000

Qn 2:
Item For Nov For Dec Total cost,Rs
Units reqd (Nos.) 2000 3000 5000
Units prodn plan (Nos.) 2500 2500 5000
Workers on rolls in October 25
(Nos.)
Workers reqd (Nos.) 2500/100=25 2500/100=25
Salary (Rs) 25X4000=100000 25X4000=100000 200000
Workers to be nil nil
Hired (Rs)
Hiring cost (Rs) nil nil
Workers to be nil nil
Laid off (Nos.)
Lay off cost (Rs) nil nil

Inventory (Nos.) 2500-2000=500 nil 500

Inventory carrying cost(Rs) 500X10=5000 nil 5000
Net total cost(Rs) 5000
Agregate Planning –Summarised Steps:

(1)Aggregate Planning (AP)

Demand Forecast: 3 Ranges 1)Long 2) Medium &3)Short

1)Long range : Capacity Planning etc.

Company; has many products & Facilities.Hence Scheduling is required.

AP follows : 1)capacity planning & 2) Plans for Medium Range.

(2)AP methods
Regular time:
Prodn capacity
(constant work force)
Feature:
Through uniform Production, build inventory& use it in demand peak periods

Sub contracting , build capacity

Through Overtime , build capacity
Through Hiring & firing,build capacity
(3) Identify :Feasible Method(Least cost method)
Agregate Planning –Standard Examples
Aggregate Planning through Varying Man Power (Hiring&Firing Method)
Assumptions: wage cost / person / month/ to make one unit = Rs 1.0 Lakh/unit, Cost for hiring= Rs
10000/ person, Cost for removal= Rs 20000/ person, Let sale price be Rs 1.25 L/unit
Qr (Varying) Men Wage Hiring Firing Total TC/ Total Price/ Profit/ Profit
–demand emplo cost Cost Cost( Cost Unit Sales Unit( unit (Rs L)
(Nos.) yed (Rs (Rs L) Rs L) (RsL) (RsL) (RsL) Rs L) (Rs L)
(Nos.) Lakhs)
1 270 270 270 270 1.000 337.5 1.250 0.250 67.5
(Let)
2 220 270- 220 50X 230 1.045 275.0 1.250 0.205 45.0
50 = 0.2=
220 10
3 470 220+2 470 250X 495 1.053 587.5 1.250 0.197 92.5
50=47 0.1
0 = 25
4 670 470+2 670 200X 690 1.030 837.5 1.250 1.220 147.5
00=67 0.1
0 =20
5 450 670- 450 220X 494 1.098 562.5 1.250 0.152 68.5
220=4 0.2
50 =44
6 270 450- 270 180X 306 1.133 337.5 1.250 0.117 31.5
180=2 0.2=
70 36
7 200 270- 200 70X 214 1.070 250.0 1.250 1.180 36.0
70=20 0.2=
0 14
8 370 200+1 370 170X 387 1.046 462.5 1.250 0.204 75.5
70=37 0.1=17
0
Ttl2920 2920 2920 62 104 3086 1.056 3650 1.25 0.1932 564
8

1.Graphical Method:
Method :Uniform Production Rate : of 365 Units/ Qtr
Quarter (Varying)- Cumulative- Uniform Cumulative
Demand(Nos.) Demand (Nos.) production(Nos.) production(Nos.)
1 270 270 365 365
2 220 490 365 730
3 470 960 365 1095
4 670 1630 365 1460
5 450 2080 365 1825
6 270 2350 365 2190
7 200 2550 365 2555
8 370 2920 365 2920
  2920/8 =365
Graphical representation can be made.
(2) Heuristic Method AP :
PURE STRATEGY 1: Varying Work Force:
Rs 150/Unit/Increaseease in production(Hiring), Rs 200/Unit/Decr in production(Firing),&Rs 50
/Unit/Quarter as Inventory carrying cost &Rs 100/Unit/If Sub-Contracted

PURE STRATEGIES
Vayring STRATEGY 1  
Work
Force
(Hire/Fire
)
Quarter (Varying) Cumulative Cost of increasing the Cost of decreasing the TOTAL
Demand Demand production production COST
(Nos.) (Nos.) (Rs) (Rs) (Rs)
1 270 270  
2 220 490 50 X 200 10000
3 470 960 250 X150 37500
4 670 1630 200 X150 30000
5 450 2080 220 X200 44000
6 270 2350 180 X200 36000
7 200 2550 70 X200 14000
8 370 2920 170 X150 25500
TOTAL     93000 104000 1,97,000
(3) Heuristic Method AP:
PURE STRATEGY 2: Varying Inventory Levels :
System :Let opening Inventory be255 units. Let Constant production rate be365 units. Let Rs 50
/Unit/Quarter be the Inventory carrying cost.

Qrtr Dem Cum Unif Cum  Inventory + or – Adjusted(*) Inventory

(Nos.) Dem prod prod build Change in Inventory carrying
(Nos.) (Nos.) (Nos.) up(Nos.) Inventory (Nos.) cost
(Nos.) (Rs)
Col 1 col 2 col 3 col 4 col 5 Col 6 =(c5- col 7, col 8 Col 9
c3) Note:
(Use col(6)
1 270 270 365 365 95 ** 0(Ref) 95**+ 255 350*50
= 350
(255 being
opening invy)
2 220 490 365 730 240 240 - 95 350 + 145 495*50
(=145 ) =495

3 470 960 365 1095 135 135 - 240 495-105= 390 390*50
(= - 105)
4 670 1630 365 1460 - 170 - 170 - 135 390-305 =85 85*50
(= - 305)
5 450 2080 365 1825 - 255 - 255+170 85-85= (0) 0
(= --85)
6 270 2350 365 2190 - 160 - 160+255 0+95 =95 95*50
( = 95)
7 200 2550 365 2555 5 5 + 160 95+165= 260 260*50
(=165)
8 370 2920 365 2920 0 0- 5 260-5= 255*50
(= - 5 ) 255
Total               1930*50
=96,500
(4) Heuristic Method AP:
PURE STRATEGY 3: Sub-contracting System & Constant rate of uniform production of 200
units&balance sub-contracting) &Rs 100/unit ,if sub-contracted.

Quarter (Demand Production Sub- Sub -

Varying) uniform Contract Contract
units cost
Col 1 Col 2 Col 3 Col 4 Col 5
1 270 200 70 70 X 100
2 220 200 20 20 X 100
3 470 200 270 270 X 100
4 670 200 470 470 X 100
5 450 200 250 250 X 100
6 270 200 70 70 X 100
7 200 200 0 0
8 370 200 170 170 X 100
TOTAL   1320 X 100
=1,32,000

(4) Heuristic Method AP: MIXED STRATEGY:

 System : (1) Constant rate of uniform production of 250units,(2) Produce additional 20% of production
of 250, in OT, if Demand in the Qtr is >Prodn (=20%X 250=50 units), (3) For Further demand, use Hire method
/ Use Fire Method.
Costs :(1)Rs 50 /Unit/Quarter as Inventory carrying cost (2) Rs 25/Unit for Prodn during OT(over-Time)
& (3) Rs 150/Unit/Incr in production(Hiring), Rs 200/Unit/Decr in production(Firing)

De Uni +/_ OT Ttl Net +/_  Inv Hire / Fire Cost Cost of cost of
m f prod Prod Build up of OT,Rs H / F,Rs
pro Inv, (Rs25/U) (Rs 150/200)
d Rs(Rs
50/U)
C1 c2 c3 c4 c5 C6= c7 C8 C9 C 10 c11
=(c1 =(c2+c4 (c1-c5) Use c6&c7
-c2) )
270 250 20 50 250+50 -30 (surplus) - 30 (Inv) (i) 30*50 50*25  
(i) (i)
220 250 -30 0 250 -30 (surplus) - 30-30(inv) 60*50 0  
(j) (k) (b)
= (i) + (j)

470 250 220 50 250+50 170 Hire 170- 50*25 110*150

(a) 60= 16500
(a) – (k)=
110 (c)
670 250 420 50 250+50 370 (d) Hire 370 – 50*25 260*150
shortage) 110 already 39000
Hired =(d) –
(c) = 260
450 250 200 50 250+50 150 (e) Fire 370-150 50*25 220*200
(shortage) = (d) – (e) “44000”
= 220
270 250 20 50 250+50 -30 (surplus) -30(inv)(l) Fire 150 (= 30*50 50*25 150*200
(l) (e) (j) “30000”

200 250 -50 0 250 -50 (surplus) - 30-50(inv) 80*50 0  

(m) (n) (k)
= (l) + (m)
370 250 120 50 250+50 70 (shortage) - 10 (inv)(p) 10*50 50*25  
(o) = (n) + (o)= (l)
-80 +70
292 200   300   2300  620   210*5 300*25  
0 0 920 (shortage) 0
Ttl 10500 7500 129500
G/T 147500

SOME -MORE METHODS OF AGGREGATE PLANNING:

Transportation model: AP may be solved as an LP Problem.ComputersofTwares like ‘storm’, ORS,
Lindoetc are available.

2.3:
BASICS OF PROJECT MANAGEMENT……………Text Book pp192 to 223

Points:
(i) Concept of a Project
(ii) Common Terms : Activity, Node (or Event), CPM, PERT,
ProjectCrashing, Critical Path, Floats etc.

The word “Project” conjures up a mental picture which is unique,big,multi-agency built, with huge no. of
activities and a composite affair.
eg :Visakhapatnam steel plant, recent space Mars Mission India etc.

Exhibit1 RINL,Visakhapatnam Steel Plant Exhibit2 Mars Mission India

In yester years, we had great projects, such as Egyptian pyramids, Tajmahal, Bhakra-NangalDam
,Kalpakkam Atomic Power Project etc.
Exhibit 3 Egyptian Pyramids Exhibit4 Tajmahal

Exhibit MBA Program

Exhibit BhakraNangal Dam

1. Project: Unique one-time operations designed to accomplish a specific set of objectives in a limited
time frame.
Egs: Construction of hospital, ship, R&D for launching a missile, new project, Design &Development of
new product, Chandrayan, preparation for UPSC Exam….

The 4 goals for Successful project management:

Exhibit Goals

Successful project management implies 4 goals.These are

(i)Project must get”Completed.

(ii)Get completed ”within Budget”
(iii)Get completed ” within Allocated Time”
(iv)On completion(of project) subsequently the“Plant”“must perform to all the stake holders’
satisfaction”.
The project upon its completion is called “Plant or operational unit or entity”,which functions
“repetitively” or “continuously” to seve society’s needs..
During project stage, huge resources are deployed/spent,and no production and revenue occurs.
Once project is completed, regular production starts, the plant becomes “revenue” i.e. it earns revenue.
Eg: A 2000 MW NTPC Project, generally takes 4 years for its planning and execution.
During this period, only investments/expenditures are incurred. But on its completion, it produces power,
earns revenue and meets society’s needs. In the first 4 years , it is called “NTPC Project” & after that it is
called”NTPC Plant”.

Simple Illustration of Project Concept:

Of preparation of Tea: Eqpt: 2 burner gas stove.There are 8 activities .Details of these and time taken are
as shown.A project net work is to be drawn.
Activit Activity description Time
y ( mins)
code
A Arrange Vessels (2 Nos.),Tea powder , Sugar cubes , 2 Burner Stove etc., 3.0
B Pour water into Vessel#1, put on Burner , light the BURNER & boil . 4.0
C On boiling ,Add tea powder & stir. 0.5
D Add sugar, stir & lower down Vessel #1 & filter using Filter mesh. The 2.0
output is tea decoction.
E Pour milk in Vessel#2, put vessel on Burner again, light the BURNER , boil 6.0
& lower down Vessel #2.
F Add boiled milk to tea decoction in Vessel #1, put vessel on the Burner & do 3.0
final boiling. The output is tea.
G Lower the Vessel#1, containing the tea. 0.5
H Pour into 4 cups .assemble on tray for serving. 1.0

How many activitires are there : 8 activities.

Each activity has One time estimate (EG:Activity B has 4.0 mins.)
What is the arithmetical total time ?
“The arithmetical total time for the project is 20 Mins”

Drawing of a PROJECT NETWORK.

(Re call):”The arithmetical total time for the project is 20 Mins”

(Recall) :”The arithmetical total time for the project is 20 Mins”, but the PROJECT IS COMPLETED IN
14 MINUTES ,instead of 20 Minutes in EARLIER METHOD.
1.Project Networks : Planning Time Scale-Network Analysis
It is seen that a major objective of Project management is ensuring Project Completion “in (planned)
time”.Planning time scale-network analysis ensures this. Network analysis helps in effective
planning,scheduling&control of projects.
For effective monitoring & control, the project is to be broken into smaller activities.
An ACTIVITY
It is a homogeneous work element , that consumes “Resources” and consumes (or takes)
a definite amount of “TIME”.Also an activity is the smallest unit of productive work to be planned
& scheduled.
Generally, Activies are done in “Series”. However, some activities can be done in parallel.
While wall is under construction, Purchase of paint activity can be done). Eg: A (1 foot wide X 4’ high
X 6’ long) masonry wall uses 1000 bricks,2 bags of cement, 4 bags of sand,2 drums of water etc as
materials, and 2 masons X 2 days .as man power can be made, on Daily 1 shift basis working ( i.e 8 AM
to 5PM,with 1 hour rest for lunch etc). The total cost may come to a few thousands of Rupees (X,sayRs
1000).
Let us analyse this activity.In this method,cement is used. The wall also can be made with bricks and
mortar .In this case cost may be less than x(sayRs 800). In villages, walls are also made with mud. The
cost may further decrease(say Rs 500 ).However, the quality is also to be considered.
In the same example, if the activity is on 2 shifts basis it takes, half the time i.e 1 day.Similarly, on 1
shift basis, if only 1 mason is used, then the scheduled time becomes double,i.e 4 days. In both the cases,
the cost remains same(Rs 1000) ,but time consumed varies.
These principles are used in Project networks.
NODE:
Each activity will have 2 nodes(also called events),the starting node & Finishing node.
(Eg : For the activity of “Wall construction”, the start instant is called Start node or Head node and the
end instant is called End node or Tail node).These 2 nodes are shown as circles ,with a line connecting
both.This represents the activity.

Activities can be interdependent. Eg: Painting work activity for a wall is done only after wall construction)
(called serial activities)
Some activities are done in parallel. Except rarely, the project events are not Sequential in nature
• While wall is under construction, Purchase of paint activity can be done).
Other types of diagrams:
These are Activity on the Arrow System(AOA),which is a Common variety & Activity on Node
system (AON). In network diagram form, generally activity is indicated as Arrow.
These are shown below.
Dummy Activity :
At times, a non-existing & imaginary activity is required to be incorporated. This is called “Dummy
Activity”.
This ensures no loose ends in the network

Completion of Project :
A project is said to be completed, only if all the activities are completed. Some will be serial and some
parallel activities. This is to be visualized,for drawing the project network.
Information required for drawing of (Project) Networks :
(i)List all the activities
(ii)Examining Activity interdependencies
(iii)Making of Time Estimates
Method : Critical Math method (CPM)
Power plant project example :
Activity Activity Activity Activity Time estimate
Code Description Dependency on (most likely) ,” m”
(start &end nodes) (Time,in Months)
A 1-2 Designing of plant Nil 12

B 2-3 Selection of site A 8

C 2-4 Select ion of vendor A 4

D 2-6 Select Employees A 3

E 3-5 Site preparation B 12

F 4-5 Manufacturing C 18
Generator by vendor
G 4-6 Preparation of C 5
opern& maintenance
manuals
H 5-7 Installation of E,F 4
Generator

I 6-7 Train the employees D,G 9

J 7-8 Obtain License for H,I 6

operation

Arithmetical Total 81

Note: Column (4) gives the dependency relationships of activities. ie, if an activity is to commence after
completion of another activity (in Serial), or 2 (or more) activities can start at the same time( in Parallel),
or an activity can start independently (Eg : Starting activities).
In the eg above, activity (1-2) which is A, does not depend on start or end of any activity. So the project
network is drawn starting with A .
It is seen earlier that an activity has a starting and an ending node (2 nodes).This is as shown .Similarly,
the last Activity(7-8) which is J should appear at the end .

Systematically , proceeding, with these concepts, the Net work is evolved.

Note : It is seen that , there will always be one start node (initial one) at the beginning end and a finish
node (Final one) at final end.
(B) Project Network :
Method : Program Evaluation and Review Technique (PERT)

Power plant project example :

PERT type Project Network Example

Suppose, Project planners have sought the judgement of engineers, foremen & vendors & developed 3
time estimates, as shown. Determination of
(a) the critical path & time
(b) the probability the project will be finished within 4 years and
(c)what is the probability that it will take more than 55 months is required..
In this eg, there are 3 time estimates are available for each activity, the project network may be called
”PERT”.

Activity Activity Activity Time estimate Time Time estimate

Code Description Activity (Optimistic) estimate (pessimistic)
(start Depend “ a” (most likely) “ b”
&end ency (in Months) “ m” (in Months)
nodes) (in Months)
A 1-2 Designing of plant Nil 10 12 16

B 2-3 Selection of site A 2 8 36

C 2-4 Select ion of vendor A 1 4 5

D 2-6 Select Employees A 2 3 4

E 3-5 Site preparation B 8 12 20

F 4-5 Manufacturing C 15 18 30
Generator by vendor
G 4-6 Preparation of C 3 5 8
operations&
maintenance manuals
H 5-7 Installion of E,F 2 4 8
Generator
I 6-7 Train the employees D,G 6 9 12

J 7-8 Obtain License for H,I 4 6 14

operation
Arithm 53 81 153
etical
Totals
PERT EXAMPLE
(a) Drawing critical path & obtaining total project completion time: STEP 1
”Activity wise” computation of (i) mean time from the 3 time estimates & (ii) ”Activity wise”
computation of Varience are made, as shown.

Activity Activity Depen Time Time Time Te(expected) Varience

Description dency estimate, estimate, estimate, =(a+4m+b)/6 ( as per Formula)
“a” “m” “ b” ( as per
(Optimist (most (Pessimis Formula) (=Square of (b-a)/6)
ic) likely) tic)

(in (in (in

weeks) weeks) weeks) (in weeks)

A,1-2 Designing of plant Nil 10 12 16 12.33 Square of (16-10)/6 =

1 X1 = 1.0

B,2-3 Selection of site A 2 8 36 11.67 Sq of (36-2)/6 =

5.6 X 5.6 = 32.11

C,2-4 Selection of A 1 4 5 3.67 Sq of(5-1)/6 =

vendor 0.67X 0.67 = 0.44

D,2-6 Select Employees A 2 3 4 3.00 Sq of (4-2)/6 =

0.33 X0.33 = 0.11

E,3-5 Site preparation B 8 12 20 12.67 Sq of (20-8)/6 =

2 X2 = 4.0

F,4-5 Manufacturing C 15 18 30 19.50 Sq of (30-15)/6 =

Generator by 2.5 X2.5 = 6.25
vendor
G,4-6 Preparation of C 3 5 8 5.17 Sq of(8-3)/6 =
operations& 0.83 X 0.83 = 0.69
maintenance
manuals
H,5-7 Installion of E,F 2 4 8 4.33 Sq of(8-2)/6 =
Generator 1.0 X 1 = 1
2.0
I,6-7 Train the D,G 6 9 12 9.000 Sq of (12-6)/6 =
employees 1 X 1 = 1.0

J,7-8 Obtain License H,I 4 6 14 7.00 Sq of (14-4)/6 =

for operation 1.67 X 1.67 = 2.78
PERT EXAMPLE : STEP II :
Project network is drawn. (Here in called “PERT” Net work).
PERT EXAMPLE :STEP III : Identify various “all possible”paths from start to finish.

Path Times (in weeks)

Path (i);1-2-3-5-7-8(critical) 12.33+11.67+12.67+4.33+7.00=48.00
(ii);1-2-4-5-7-8 46.83
(iii);1-2-4-6-7-8 37.17
(iv):1-2-6-7-8 31.33

Comment :There are Various paths from start to finish:

There are 4 such paths.
The critical path (which is the Longest duration route
from beginning to end) is 1-2-3-5-7-8(critical),With
respective activity-wise times as
12.33+11.67+12.67+4.33+7.00, totaling to Project
completion time as 48.00 weeks

(b) The probability the project will be finished within 4 years ?

Te= 48 months; The probability (normal distribution) = 0.50

(c) what is the probability that it will take more than 55 months ?
To determine probabilities of any other completion time , it is required to calculate the variances of the
distribution of completion times along THE ACTIVITIES ON THE CRITICAL PATH, sum them and
estimate Sigma. Sigma= square root of(sigma varience)=sqrt of (1.00+32.11+4.00+1.00+2.78)=6.4
months. Z= (Tx-TE)/Sigma=(55.00-48.00)/6.4=1.09
From Z graph, for normal distribution,P(X>Tx)=0.5000-0.3621=0.1379
Hence, the Probability=0.14
PERT NETWORK -A NOTE:

This probability computation is of utmost importance to top management & Managers to intervene,
if& when needed.
This is how PERT Network is found more useful than CPM Network.
How ever, for simple projects or projects which are repetitive(like building construction projects),CPM
will serve the purpose.

Project Network –Floats computation : With an Example

Note : TF = LS (i-j) –ES (i-j)

A Flt . D Flt . G Flt . J Flt . M Flt .

0 1 . 7 1 . 1 7 . 1 4 . 4 45 .
8 1 8 0 0
0 1 0 . 2 2 13 . 1 20 13 . 1 4 0 . 4 45 0 .
8 0 4 4 8 0 0
. . . . .
B . E . H . K . .
0 3 . 1 7 . 7 18 . 2 3 . .
3 0
1 2 17 . 1 2 13 . 2 31 13 . 2 3 1 . .
7 0 4 0 0 4 1
. . . . .
C . F . I . L . .
0 1 . 1 9 . 1 23 . 1 2 . .
8 8 3
1 1 13 . 1 2 15 . 1 24 1 . 1 2 1 . .
3 4 6 4 9 9 4
 . . . . .

Use : Floats are used to divert resources from “Non-Critical” to “Critical Activities” thereby
ensuring Total Project completion in “Time”.

CRASHING PROJECT NETWORKS

• Crashing Project Networks: It is meant to reduce the normal project duration to the desired shorter
duration.For this purpose,the activities on the critical path are crashed(reduction of activity
time duration), by the use of additional resources/expenses.

Crashing CPM Networks-eg.,

A net work has 4 following activities.The minimum feasible time and for achieving this, the costs to be
incurred/day to crash project duration are as given.If fixed project costs are Rs 90/Day, what is the lowest
cost- time schedule?,

Activity Normal time, Minimum Direct Costs of Time reduction(Rs)

days Feasible
time,days
1-2 5 2 40(each day)
1-3 4 2 35(1st day),80(2nd day)
2-4 4 4 None possible
3-4 6 3 45(1st day),110(other days)

STEP 1 : ALT ( 1)……… Reference cost for 10 days=Rs 90*10= Rs 900

STEP 2: :ALT (2)

Present Reference cost for 9 days=Rs90*9= Rs 810

Crash cost for decreasing , time of activity 1 – 3, by 1 day, from 4 to 3 days = minimum cost slope
selected
= Rs 35
COST differential = Previous step cost – present reference cost for 9 days – cost slope selected =
( Rs900 ) -(Rs 90*9 +Rs 35) =Rs 900 - 845 = Rs 55

Hence, Cost differential = 55 ( Positive number)

STEP 3: :ALT (3)

Present Reference cost for 8 days=Rs90*8= Rs 720
Crash cost for decreasing , time of activity 1 – 2, by 1 day, from 5 to 4 days & also time of activity 3 – 4,
by 1 day, from 6 to 5 days = the 2minimum cost slopes selected = Rs 40 + Rs 45 = Rs 85
COST differential = Previous step cost – present reference cost for 8 days – cost slopes selected =
( Rs 810 ) -(Rs 90*8 +Rs 85) =Rs 810 - 805 = Rs 5
Hence, Cost differential = 5
STEP 4: :ALT (4)
Any further reduction of time on any critical path/s, will render the Cost differential as a Negative
number.Hence, no more reduction of time is “PROFITABLE”.
Crashing by only 2 days is POSSIBLE. i.E, THE PROJECT CAN BE COMPLETED IN 8 DAYS
,INSTEAD OF 10 DAYS,FOR WHICH EXTRA COSTS (CALLED, CRASHING COSTS) ARE TO
BE INCURRED.
SUMMARY OF STEPS IN NETWORK CRASHING:
Step 1 :Determine the time-cost ratio for each activity in the network. This ratio represents the increase in
cost for a unit decrease in time.
• Time-cost ratio =Increase in cost/Decrease in time;
• = (Crash cost-Normal cost)/(Normal time-Crash time)
Step 2 :Identify the activities on the critical path and select that activity on the critical path which has the
smallest time-cost ratio and crash that activity to the extent possible.
Step 3 : Observe whether there is any change in the critical path i.e., any other path becomes critical. If so,
calculate the time-cost ratio for the activities in the new critical path.
Step 4 :Repeat step 2 and 3, till the activities are crashed to reduce the project duration to the desired time
period.
&Resource Levelling

Note :PRACTICE PROBLEMS FOR SOLVING:

PRACTICE PROBLEM-1 :
ALPHA GARMENTS MANUFACTURING CO:
The “ACTIVITIES” involved in Alpha Garment Manufacturing Co. are listed with their “TIME
ESTIMATES”.
(1) Draw “PROJECT NET WORK”,
(2) How many “CRITICAL PATHS” are there ?identify the“CRITICAL PATH / PATHS “
(3) Compute the ESTIMATED COMPLETION TIME (LIKELY COMPLETION DURATION /
PERIOD)
(4) Find & List-out the SUCCESSOR ACTIVITY/ ACTIVITIES for Each Activity.
&
(5)Also, INCORPORATE reasonable cost for each ACTIVITY ( in Lakh Rs) and compute TOTAL
PROJECT COST.

Activity Activity This activity Activity

Code Description Depends on: Duration
(No. of days)
A Forecast Sales volume ----- (Nil) 10

B Study competitive ----- (Nil) 7

Market
C Design Item & A 5
facilities
D Prepare C 3
PPC(Production Plan)
E Estimate Cost of D 2
Production
F Set Sales Price(Per B,E 1
Unit)

PRACTICE PROBLEM-2 :
CIVIL CONSTRUCTION OF A HOUSE:
(1) Draw “PROJECT NET WORK”,
(2) How many “CRITICAL PATHS” are there ?identify the“CRITICAL PATH / PATHS “
(3) Compute the ESTIMATED COMPLETION TIME (LIKELY COMPLETION DURATION /
PERIOD)
(4) Find & List-out the SUCCESSOR ACTIVITY/ ACTIVITIES for Each Activity.
&(5)Also, INCORPORATE reasonable cost for each ACTIVITY ( in Lakh Rs) and compute TOTAL
PROJECT COST.
Civil construction of a house(along with immediate predecessor details)
Activity Activity This activity Activity
Code Description Depends on: Duration
(No. of days)
A Design/Approval of plan ----- (Nil) 8
B Make foundation/build super structure A 12
C Select &order Electrical & other accessories A 4
D Wiring of the building B 2
E Carpentry works B 8
F Laying of Roof D 2
G Wall plastering/laying floors/Painting E,F 3
H Fixing of fittings(Sanitary, electrical etc) C,G 2
I Giving power and water connections for the site E,F 2
J Final polishing ,testing & handing over I,H 2
PRACTICE PROBLEM-3:
NEW PROJECT LAUNCH OF PRODUCT:
(1) Draw “PROJECT NET WORK”,
(2) How many “CRITICAL PATHS” are there ?identify the“CRITICAL PATH / PATHS “
(3) Compute the ESTIMATED COMPLETION TIME (LIKELY COMPLETION DURATION /
PERIOD)
(4) Find & List-out the SUCCESSOR ACTIVITY/ ACTIVITIES for Each Activity.
&
(5)Also, INCORPORATE reasonable cost for each ACTIVITY ( in Lakh Rs) and compute TOTAL
PROJECT COST.
New Project Launch of Product (along with immediate predecessor details)

Activity Activity This activity Activity

Code Description Depends on: Duration
(No. of days)
A Identify market needs ----- (Nil) 10
B Develop the conceptual design A 15
C Develop the detailed design B 3
D Create the marketing infra structure B 18
E Manufacture(Make) product C 10
F Reach Market D,E 6

PRACTICE PROBLEM-4 :

CONSTRUCTING A COMMUNITY HALL :

(1) Draw “PROJECT NET WORK”,

(2) How many “CRITICAL PATHS” are there ?identify the“CRITICAL PATH / PATHS “
(3) Compute the ESTIMATED COMPLETION TIME (LIKELY COMPLETION DURATION /
PERIOD)
(4) Find & List-out the SUCCESSOR ACTIVITY/ ACTIVITIES for Each Activity.
&
(5)Also, INCORPORATE reasonable cost for each ACTIVITY ( in Lakh Rs) and compute TOTAL
PROJECT COST.

A Construction Co. has listed down various activities involved in constructing a community hall(along
with immediate predecessor details)

Activity Activity This activity Activity

Code Description Depends on: Duration
(No. of days)
A Plan approval ----- (Nil) 60
B Site preparation ----- (Nil) 10
C Arranging foundation materials A 10
D Excavation for foundation B 5
E Carpentary work for door &window main A 15
supporting frames
 F Laying foundation C,D 6
G Raising wall from foundation to window F 4
base
H Raising wall from window base to lintel E,G 4
level
I Roofing H 10
J Electrical wiring & fitting I 4
K Plastering J,L 3
L Making doors&windows and fixing them A 6
M White washing K 2
N Clearing the site before hand over M 3

PRACTICE PROBLEM-5 :

NEW PRODUCT LAUNCH PROJECT:

(1) Draw “PROJECT NET WORK”,
(2) How many “CRITICAL PATHS” are there ?identify the“CRITICAL PATH / PATHS “
(3) Compute the ESTIMATED COMPLETION TIME (LIKELY COMPLETION DURATION /
PERIOD) (4) Find & List-out the SUCCESSOR ACTIVITY/ ACTIVITIES for Each Activity.
&(5)Also, INCORPORATE reasonable cost for each ACTIVITY ( in Lakh Rs) and compute TOTAL
PROJECT COST.
For a New product launch project, the various activities are listed(along with immediate predecessor
details)
Activity Activity This activity Activity
Code Description Depends on: Duration
(No. of Weeks)
A Finalise package design Nil 2
B Set up packaging equipment and procure A 8
raw materials
C Produce the first batch Nil 12
D Package the first batch B,C 4
E Set up the sales office Nil 4
F Recruit salesmen E 4
G Train salesmen F 6
H Select retailers E 8
I Sell to retailers G, H 3
J Despatch to retailers D,I 5
K Select advertising agency E 4
L Plan advertisement campaign K 9
M Release pre-launch advertisements L 1
N Conduct advertisement campaign J, M 4

PRACTICE PROBLEM-6 :
A PROJECT NETWORK:
(1) Draw “PROJECT NET WORK”.(2) How many “CRITICAL PATHS” are there ?identify
the“CRITICAL PATH / PATHS “(3) Compute the ESTIMATED COMPLETION TIME (LIKELY
COMPLETION DURATION / PERIOD) (4) Find & List-out the SUCCESSOR ACTIVITY/
ACTIVITIES for Each Activity.
A Project network comprises the following activities.
Activity Code Activity Duration(No. of Weeks)
1- 2 2
1- 4 6
1- 3 12
3- 5 4
2- 4 dummy activity
5- 6 2
2- 7 4
5- 7 dummy activity
4- 8 6
6- 8 8
7- 8 8
2.4
(IV)MAINTENANCE MANAGEMENT
 Points :
(i) Concept of Maintenance management
(ii) Terminology : %Availability,% Utilisation , Maintenance Crews,(MTBF etc.
(iii) Areas of Maintenance management
(iv)Types of Maintenance management
(v) Preventive Maintenance Vs Breakdown Maintenance
(v) Practical Problems on Maintenance management
(iii) Summary
MAINTENANCE OBJECTIVE : Adding value through Maximisation of Availability of FACILITY.
POINTS :
(i)Types of Maintenance, Costs associated ; Replacement of Facilities, Failure of deterministic type of
items & Stochastic types, Reliability concept;
(ii)Measurement; Preventive Maintenance Hours, Break Down Hours, M.T.B.F(Mean Time Between
Failures)…
(iii)MIS for Maintenance. Management;
(iv)TPM & its Pillars, Organisation chart for Maintenance. Management.
EQUIPMENT AVAILABILITY &UTILIZATION CONCEPTS:
Ex 1:
1 Shift Operation: (1 year old Motor Cycle’s) Use by College student V/s (1 year old Motor Cycle’s) Use
by Medical Sales Representative
AND
Ex 2:
1 Shift operation:(4 years old Car’s) Use by Co.Executive V/s (4 years old Car’s(Cab) Use by Cab
operator.
Note : In the diagrams shown:
Ellipse…………represents Break down period &Rectangle……… represents Break down period.
Ex 3: 3 Shifts operation:
1 year old Cab’s Use
Vs 4 years old Cab’s Use
S. SSH= BDH= MAH= MUH= %A %U %U Co
No Example Stnd Break Mc McUtili =% =% / m
Scheul Down/M Availabl zed Availabil Utilization %A me
ed ntnce e Hours Hours ity nts
Hours
Hours
c1 (c2) (c3) (c4) (c5) (c6) (c7) (c8) (c9) (c1
 0)
1 Student, 8 0.083 8-0.083 0.5 (480- 30X100/ (30)X100/4
M/Cy1 Hours Hours =7.917 Hours= 5)X100 480= 75=
yr old = = Hours (30 /480= 6.25% 6.315%
(1Shift (480mi (5 mins) =(480- mins) 98.95%
oprn) ns) 5=475mi
100% ns)
(Base)
2 Med 480m= 30 min 450min 180min (480- 180X100/ (180)X100/
Repr, 30)X100/ 480= 450=
M/Cy1 100% 480= 37.5% 6.315%
yr old 93.75%
(1Shift
oprn)
3 Exec,M/ 480m= 15 min 465min 90min (480- 90X100/ (90)X100/4
Car, 15)X100/ 480= 65=
4 yrs old 100% 480= 18.75% 19.35%
(1Shift 96.87%
oprn)
4 Cab 480m= 60 min 420min 240min (480- 240X100/ (240)X100/
Oprtr 60)X100/ 480= 420=
M/Car, 100% 480= 50.0% 57.15%
4 yrs old 87.5%
(1Shift
oprn)
5 Cab 3X 90 min 1440- (1480- Mc. Available
oprtr, 480= 90=1350 90)X100/ time= 1350 mins,
M/Car, , 1440 min 1440= No. of Br.Downs=
1 yr old m= 93.75% 3Nos.
Hence, MTBF=
(3 Shifts 100% 1350/3=450
Oprn) mins(7.5 hrs). ie,
on the average,
once in 7.5
hours,there is a
Break down.
6 Cab 210 min 1440- (1440- Mc. Available
oprtr, 480m= 210=123 210)X10 time= 1230 mins,
M/Car, 0 min 0/1440= No. of Br.Downs=
5yrs old 100% 85.42% 6Nos.
(3 Shifts Hence, MTBF=
Oprn) 1230/6=450
mins(7.5 hrs). ie,
on the average,
once in 3 hrs 25
mins ,there is a
Break down.
COMPUTATIONS OF SSH,MAH ,MUH & MUH / MAH ,at a Glance
S. Machine Us Sc Shi SSH = BDH = MA  = %A MU  = %Ut For
N er hed fts/ (Sch (Sch (Break (Brea H (Mac vail H(M (Ma ilisat Top
o ule Da d d Down kDo (Mac hine abil achi chin ion Mgt
y Shift Shift Hours) wnM hine Avail ity ne e =U %U/
Hour Mins ins Avail able =A Utilis Utili % %A
s ) able Mins % ed sed
 Hour ) Hour Min
s) s) s)
c1 c2 c3  c4 c5 c6= c7= c8 c9=c C10= c11= C10 c13 c14 C15= C16=c
c5X8 c6X6 8X60 c6-c8 c10X =c1 =c1 c13X 15X10
0 60 0X1 3X6 100/ 0/
00/ 0 c6 C12
c6
1. Mobike, Stu Da 1 8 480 0.083 5 7.917 475
a 1Yr Old den y  =8-.0
t 83
2. Mobike, M/ 1 8 480 0.500 30 7.500 450 7.5x 3.00 180 3X10 37.50
a 1Yr Old Re Da =8-.0 100/ /8= X
pr y .5 8= 37.50 100
93.7 /0020
5 93.75
=40.0
2. Mobike, M/ We 6 48 2880 3.000 180 45.00 2700 93.7 18 180 37.50 40.0
b 1Yr Old Re ek( 0=48 5
pr 6d) .0-.3.
0
2. Mobike, M/ Mo 25 200 1200 12.500 750 187.5 1125 93.7 75.00 180 37.50 40.0
c 1Yr Old Re nth 0 00=2 0 5
pr (25 00-
d) 12.5
2. Mobike, M/ Ye 30 2400 1440 150.00 9000 2250. 1350 93.7 900.0 180 37.50 40.0
d 1Yr Old Re ar( 0 00 0 000= 00 5 0
pr 30 2400
0d) -150
3. car,4Yrs 1 8 480 0.250 15 7.750 465 7.75 1.50 90 1.5*1 18.75
a Old Ex Da *10 00/8 X
ec y 0/8= =18. 100 /
96.8 75 96.8=
8 19.4
4. cab,4Yr Ca Da 1 8 480 1.000 60 7.000 420 7X1 4.00 240 4X10 50.0X
a s Old b y 00/8 0/8= 100/8
opt =87. 50.00 7.5=
r 50 57.1
5. cab,4Yr Ca 3 24 1440 1.500 90 22.50 1350 22.5        
a s Old b Da 0 X10
opt y 0/24
r =93.
75
6. cab,5Yr Ca 3 24 1440 3.500 210 20.50 1230 20.5        
a s Old b Da 0 X10
opt y 0/24
r =85.
42

COMMENTS: More the work (or UTILIZATION) for EQUIPMENT (Stress), the more will be the
BREAK DOWNS.

So, if more emphasis is given to have REGULAR PREVENTIVE MAINTENANCE , the lesser will be
the BREAK DOWNS.
Ex4:MTBF Concept:

Dates of Breakdown Time Interval(Days)

1 Jan 0 (Ref)
24 Jan 23
10 Feb 17
16 March 34
30 April 45
6 May 6
Total 125
Avg Interval between consecutive failures 125/5=25 Days
MTBF 25 Days

Comments:

If MTBF is less,What does it indicate?

If MTBF is more,What does it indicate?
Which alternative is preferred?
What should be MTBF for (i) Aeroplane (ii) Nuclear Reactor ,(iii) Motor cycle(iv)Ambulance,108 ,Power
systems for Medical O.Th,ICU etc.

MAINTENANCE &MAINTENANCE MANAGEMENT

(i)Maintenance: The function of production management, that is concerned with day -to-day problem of
keeping the physical plant in good working condition.

(ii)Maintenance management: Concerned with planning, organising and directing the resources in order
to control the availability and performance of the industrial plants to some specified level.

OBJECTIVES OF MAINTENANCE MANAGEMENT

1. Minimizing the loss of productive time because of equipment failure (i.e., minimizing idle time of
equipment due to break down).
2. Minimizing the repair time and repair cost.
3. Minimizing the loss due to production stoppages.
4. Efficient use of maintenance personnel and equipments.
5. To keep all productive assets in good working condition.

6. Prolonging the life of capital assets by minimizing the rate of wear and tear.
7. To maximize efficiency and economy in production through optimum use of facilities.
8. To minimize accidents through regular inspection and repair of safety devices.
9. To minimize the total maintenance cost which includes the cost of repair, cost of preventive
maintenance and inventory carrying costs due to spare parts inventory.
10. To improve the quality of products and to improve productivity.
AREAS & TYPES OF MAINTENANCE

AREAS OF MAINTENANCE
(i)Civil Maintenance
(ii)Mechanical Maintenance
(iii)Electrical Maintenance
TYPES OF MAINTENANCE
(i)Break down maintenance or corrective maintenance,
(ii)Preventive maintenance,
(iii)Predictive maintenance,
(iv)Routine maintenance,
(v)Planned maintenance

(i)BREAK-DOWN-MAINTENANCE:
Corrective or remedial maintenance that occurs when or after equipments or machines fail and must be
repaired on an urgent basis.

(ii)PREVENTIVE MAINTENANCE:
Maintenance activities under taken before the machines or equipments fail. Aims to minimise the
possibility of unanticipated or major break-downs.(Inspection, servicing,lubricating,greasing, mnt of
buildings etc.,

(iii)PREDICTIVE MAINTENANCE:
Modern approach to preventive maintenance using sensitive instruments to predict anticipated failure of
machines and equipments.(vibration, temperature, pressures etc.,)

(iv)ROUTINE MAINTENANCE:
This includes activities such as periodic inspection, cleaning, lubrication, and repairs.(Running
maintenance, when m/c is working, Shut down maintenance)

(v)PLANNED MAINTENANCE :

Maintenance activities that are carried out according to a predetermined schedule. Also known as
scheduled maintenance or productive maintenance.(BDs do not occur in a planned manner, but
maintenance work can be planned in advance , which REDUCES sudden BDs needing emergency
maintenance).

MAINTENANCE POLICY& ECONOMIES OF MAINTENANCE

MAINTENANCE POLICY:

These depend upon

(i)On size of the maintenance department.

(ii)On extent of maintenance activities and

ECONOMIES OF MAINTENANCE
At the optimal level of maintenance preventive maintenance cost equals breakdown maintenance cost.

OPTIMAL LEVEL OF MAINTENANCE,

CREW SIZE COSTS:

TOTAL PRODUCTIVE MAINTENANCE(TPM)

TPM Combines total quality management concept with strategic view of maintenance from process and
equipment design to preventive maintenance.

TPM means(i)total employee involvement (ii)Total equipment effectiveness(zero downtime, Zero

breakdown) & (iii) total maintenance delivery system.

SPECIFIC ACTIONS OF TPM REQUIRE THE FOLLOWING;

Restoring equipment to a like-new condition, having equipment operators involved in maintenance

,improving maintenance effectiveness, training labour pool to improve job skills & effective use of
predictive & preventive maintenance technology.

IT IS THE MOST MODERN CONCEPT.

MAINTENANCE MANAGEMENT : SOLVED PROBLEMS

PROBLEM-1
For an Equipment ,the frequency distribution of Breakdowns is given hereunder. Further,if Each BD costs
Rs650, and is considering having PM at Rs200/day, to limit BDs to 1/day. Comment?
No of Break Downs(B/Ds) Freq of B/Ds in days, f(x) Probability Distribution Expected value of B/Ds =
(x) of B/Ds, p(x) x X p(x)
0 40 40/300=0.133 Nil
1 150 0.500 0.5000
2 70 0.233 0.466
3 30 0.100 0.300
4 10 0.033 0.132
Total 300 1.000 1.400
(i)Average BDs/day-1.40,
(ii)Cost of BDs/day=1.4*650=910,
(Alt) Cost of PM & 1 BD/day=200+650=850,
(iii)Saving=60/day, 60*300=Rs18000/year. It is beneficial to introduce Preventive maintenance.
PROBLEM-2
Request for maintenance service from a centralized maintenance facility ,Statistical data for 8 hours shift
from Records is given. Labour charges for maintenance crew is Rs40/hr, working or idle. The waiting
time of operators & machinery under breakdown is Rs70/hour.
(i) idle time cost of maintenance facility?
(ii)Waiting time of operators & machinery(not including repair)?
(iii)total facility idle time & machinery waiting time cost?
(iv)Assuming that for an additional cost of Rs10/hour, the maintenance centre could add another crew &
decrease the repair time by one third, would the additional cost be justified?

Request arrival Repair time reqd, Repair time Repair time ends M/c down time
time with one begins (clock (clock time) with one crew(idle
crew(mins) time) time +repair
time)=Total time
01:30 60 01:30 02:30 Nil+1.00=1.00
02:00 20 02:30 02:50 0.5+0.33=0.83
04:15 45 04:15 05:00 Nil+0.75=0.75
04:30 120 05:00 07:00 0.5+2.00=2.50
05:30 30 07:00 07:30 1.5+0.50=2.00
07:00 10 07:30 07:40 0.5+0.166=0.666
Total 3.00+4.746=7.75

(i) idle time cost of maintenance facility?

idle time=Repair =(8.00-4.75) hours.
cost= 3.25*40=Rs130/
(ii)Waiting time of operators & machinery(not including repair)?
=3.00 *70=Rs 210/
(iii)total facility idle time &machinery waiting time cost?
=Rs130+Rs210=Rs340/
(iv)Assuming that for an additional cost of Rs10/hour,the maintenance Centre could add another
crew & decrease the repair time by one third, would the additional cost be justified?
One more crew’s cost= Rs10*8=Rs 80/
Decrease in repair time= 1/3 rd of original Cost =1/3 *4.75=1.582 hrs
Decrease in idle time cost, for machinery=1.582*70=Rs 110.74,
It is justified to have one more maintenance crew.