40 Production and Operations Management

2.5 CAPACITY AND MATERIAL REQUIREMENT PLANNING

The Material Requirement Planning (MRP) Technique makes it easier to

the quantity and timing for procuring materials as per the- Master .Pro
Schedule (MPS). While Capacity Requirement Planning (CRP) helps in
the capacity requirements of machines and manpower to achieve the objectives
by MfS and tltip. fne technique that integrates all managerial functions. st'd
finance, marketing, personnel and engineering with Production Planning and C'
is MRP-II. These dJys, with the help of computers, these techniques are used
effectively and efficiently. Nowadays, Enterprise Resource Planning or ERP
is widely used in organizations across the globe.

2.5.1 Copocity Plonning

Capacity is defined as the ability ofthe machine to produce. The capacity ofa
is ieteimined by aggregating machine capacity. Characteristically, in pror
and operations **lg"-"nt, we can have potential capacity, immediate
or effective capacity.

1. Potential capacity indicates the degree to which the top management

stretch the capacity, depending on the requirements. Hence, potential caF
is considered as the strategic level decision of the organization'
Immediate capacity indicates the production capacity that can be made avail
as on date, thit is, immediately after the production plans have been made'
3. Effective capacity is the proCuctive capacity actually used by the organizatioa

Capacity planning is done to estimate the requirements of machines and mal

so as to achieve-production targets. It helps to determine capacity and to
capacity to -"t.h ."rout." availability, to cope with demand fluctuation' With
st;ble demand pattern, the task of capacity planning become easier, while si
fluctuating demind, the task becomes complicated due to the efforts reql
for optimal utilization of available resources or new resource acquisition' as
case may be. Excess capacity will minimize productivity; while under-caF
will strain customer services and the long-term growth and profitability of
organization. For effective capacity planning, production and operations m
neid to consider factors like machine standards, production cycle time,
productivity, multiplicity of shifts, plant efficiency, scheduling delays, mai
problems, power failure, absenteeism, other eventual manufacturing
iik. i-propi. design, inherent process bottlenecks, unavoidable rejection, etc h
addition, cipacity planning decisions also consider the scope ofjob sub-contracd4'
make-or-buy decisions, manpower inventory, manpower planning, etc The
 production pianning
and Control
4l
ANNING
-_r..-_:l ro compute
the available machine and
_--_ .::::_::et.
__-r-,ip, man_hours, ro match
r;sier ro decide
;:er Production
: :' :: :::]fehension, we can list the following
factors:
:r determining -. . - .' . ro be manufactured
e cbjectives set l:lr.. t:ron process is quire for the presenr and in the near future:
:::ions such as simple. as the comDa
: . : -... r.. ou r r hese a", n i r", no*"u"':
:E and Control spei
ma\ even kcep in riew ,n".r"ri"r
;:;I:lJ.::r;:.:"r..iil:
I "r]Tlg"r.
a-'e used more
: ERP software
j _: document. ofthe orgtnization. r.n,irnenrs and rhe
:r :* _:-:iion of Standard Output
Information:
'', ,=;;lt.JTrH ff:l j"' ot opcratr'on can be made avairable
-
__. :..i'ays .o,."*, ;r';"l,":i*
from

-_-:.,,ianv organizarions,,*h-;ch ;[::.:nfl""i.lf::r*':;ii:.,1:

have-conii".l)._".rr,"" literatures,
::. ofa factory - ." ::-.: :.lle time as the
srandard ,jrn" r"; ."rnp;;r"r'ion
:: production pt"nni.,g, ur. .,o*
. : , -:_: -:
difficulties_and labour r.,.".,
ori.int i.irn i_p1.p".;.1 co_relarion.
-r re capaclty, ::re standard output rare.has
,o b."d.;";;;;J
_,- :.: .:_specific standard time, duJy.*,li;;;;;,;';;.J" by evaluaring the
. - .::aess Sheet
can, to
r,ray. rhe Route
::qement can
. :,- e). rhe
-., correcr
extent, supplement efforts tu,
."y noi,
r:rla1 capacitl :. . * '..i,*"T*
:-:ng af ,antity to be manufactured:
:aCe available
r i: :nother important factor for capacity
planning.
::r nrade. *.".:
'_:anization. ' -- :::-lciency rate determination:
r-- :: derermined along with standard
output rate determination, by
selection or qualified wort<ers
:: manpower
' . ,--:o:J:ffi::oJ;rJn" re some of the important irsre, 1as sample),
_.J LO aolust inuolv"d in,this
::Jn. With a : -
. rlhile with -- :iciencv Factor:
:,s requireci
_-_:jt*:;T:.ji:!l: efficiency. duty considering
the idle time
:::on, as the
::er-capacitl
_ .
. -]fl.:f?r
effectjve capaciry ptanntni.
t;;;
tdl" #";:ffi:ril:
::.il' of the _
:. : a,res set_up time), etc.
=;.ll';"?ii*;*;.1,:3j".";l:l::.maiitenance,
Work pl in g s,r di;:;;;;;
;;;l;;i; ;;""s"_.,".
rs managers - -
e.er. rhe actual rate ol elfi crency
.: .sam
varies from machine to machine,
;;ffi;::;;
.: lc, taDou r rr:aarizarion i^ organization.
:_aaltrzatlon to
^rn.hi-^+r^,.
:aintenance - : :::r' of Shifts:
_

.- problems , -. : arorher important

::n, etc. lt : :- made white pranning capaciry.
:-:,i a decision cannot t:,:?:-,: ?:
:.tnrractine. wl ho.ur adequate
The g.hole
: .::_raKen,
-s;rift \vork is betrer rnan ".onork
stngle or rhree_shilt work
analysis.
: :J L(J5t COnStratnts. due ro obl ious
 Producrion and Operarions Management

7) Scope of Sub-contracting
Sub-contracting means job otr-loading to established vendors. Conventionally,
low technology jobs are sub-conrracted by companies to reap a cost advantage.
However, this decision js also raken after careful cost benefit analysis. A decision
to sub-contract also depenCs. ro a great extent, on organizational policies.

2.5.2 Obiectives of Copocity Plonning

Importanr objecrii.e;:: -:a::, planning are to:

1. Satislr'i;:::: ::::-: ::: :he products.

) \--^ -,:- ---._-_ -._--:-
3. Oprirnr:: ,.-e ,.,:,'' ::'.-e:r:renr to reduce the volume of break-even quantity.
4. Build G:2:::::; :::::iia:he long-term objectives ofthe company.
Some imp'or:t:: :::-s::::.::cns tor capacity planning are issues involved in products
and senices. ::-\3!-. =--:::-<. operational issues, supply chain issues, break-even
level. etc.

2.5.3 Process of Copocity Meosuremenl

For an o:sa:::-a:i:: :::::*: ::i rhe manufacture ofa single product or homogenous
producrs. ce::::.. :::,li--::::--,.n: is relatively simple, as it can be measured in terms
of the nur-: :: .::::s ::rc::;ed per unit of time, say daily, weekly, monthly or
annuaih'. Fc: er::::-e. : --11:ei malufacturer's capacity can be understood in terms
of the number c: s:cr--:e:s :::c;ced in a month. While, for a shoe manufacturer, such
measuremenr ::r, lt :::e :: :e:ms of the number of pairs produced in a month.
But for organi:atjo:s e:-:a:ei :n the manufacture of multiple products, capacity
measuremenr in le::rs --::ei::a:le units per unit dme becomes difficult because
of the sharing of co;:-::c: :::a:uiaouring facilities. In such cases, capacity may be
defined in rerms or ai a;ia:-e -alpur hours or machine hours. For example, for a
.job-shop or intermirrenr r\=::ducrion system, capacity can be measured in terms
of labour or machine hours.

2.5.4 Differeni Types of Copocity

Capacity limits the capabilin oi the organization. Although such capability
limitations can be overcome ro some exrent by introducing multi-shifts or by
sub-contracting, by and large, such capacitv can be quantitatively described as
follows:
 a:cducrion Planning and Conrrol

" .: _:::::n. fijs denotes the actual capaciry licensed by

I _.n','entionally,
: :..st advantage.
:-.;:s. A decision
::,:olicies-
'-,----: ::tties. Before starting actual production, the concerned
the required
-: :::: :: D! rhe organization, Government capacity
authorities will vouch for
-. : ::.:s ;apacity, after due inspection of available facilities in the
;- - ' ::alirr., a particular organization may obtain higher
licensed
:: r _: jrure expansion requirements in view.
:

-- : : ::l::in.r It represents capacity in terms ofmachines actuallv installed-

, :' - -:: j ibr instaliation ha-ve some defined capacity, p-"ia"J
: ': iierarure. The sum ol such capaciry gives the'total "J
-.:: =: capacity may not be exactly at tire same level installed
as iicensed
' : -::::::, This denotes the actual performance efficiency ofthe machines,
:. _:,ierstood after a trial run. Obviously, the highest production
-: . :ir quantity. -:j :..: benchmark. But deciding the capacity rate iased on one of
--,.: ::::eYem€nt may not be always correct. It'is necessary to assume
', _. :: :-:e performance rate of machines
over a time period, for a more
, . :ecision.
:. . ed in products
:::s. break-even
-. : : -ning ot Sonoju/i leo Estole
-...-::C in terms ofunits ofwork. Time and the machine capacity are
rn capaclty management. Operationally, capacity is generally
quantity of work in a given time frame.
:: homogenous
::.-ured in terms made available the following information on grading
and
:i-.. monthly or *rade tea'in a day.
:::.tood in terms
::. *tacturer, such -_ a::irP on standard I tme Average Qty.
:::i in a month. Required Per Kg (in required per
:--:ucts, capacity minutes) month
::::lcult because . . ---. rhe made tea on a 2 1300
:::acity may be
: e:ample, for a - :.-: JI machlne 2 1300
.:::ured in terms
, . -.re e.adea tea in 3 1300
- -.::: bins
::e graded tea in 5 1300
:: ', ariou s sizes
.,:ch capabilitv
.:.:r-shifts or bv
.'. described as
 44 Production and Operations Management

For all the above operadons, the use of wire meshes is compulsory
as it helpj
in-more accurate grading through subsequent machine runs. _Based
on the abo..:
information, estimate the requirement of wire meshes and manpower,
assuming :
labour efficiency r ate of75Vo and a plant efficiency rate of g0%.
Assume a particul:-_
wire mesh can be run for 100 hours a month, as it requires thorough
cleaiing evel..
week. The nature ofjob does not warrant multi_shift working
and one ofe.atc:
can operate two machines.

Solution
1. Compute the total hours required by multiplying standard time per
Kg. (::
hours) by the average monthly requiremeni. Sinie Srandard time per "Kg
::
given in minutes, to arrive at total working hours, it
should be divided by;i
2. Since labour efficiency is 75yo, running of wire meshes (the
equipmeni), :,.
restricred to the exrent of 75To, and thus, the above value
has io te divide:
0.75 ro arrive ar the adjusred equipment running hours.
^
3. ?y
Similarly, to arrive at capacity hours at g0% utilizition of the wire
meshe.
adjusted equipment running hours has to be divided by 0.g0.
4. Finally, rhe requirement of wire meshes (the machine), is decided
by dividir:
the adjusted capacity in hours by the available hours per machine,
which :_.
100 hours per month, as indicated above.

Therefore, the number of operators required would be two, as

the net requireme:i
of s'ire meshes is four and one operator can operate two wire meshes,/machines.

Capacity mea-surement q?es can be classified as output or input

measures for proC.:=
and process focusses respectively. For example, ,r" .o-pr,'"
the capacity utiiira:_."
rate as follows:
.
uLlltzalron
Actual ou tou r
Design capacity
Capacity efficiency rate is determined by:

Actual
Efficiency - Effective output
capacity
Effective capacity is determined as:
Effective Capacity = Design Capacity (maximum output rate) _
Allowances ie.:.
personal time, maintenance, and scrap)
 i :.j SeqLrencing of production
145

r' : rn\cnror. Henry Gantt (i917),

is a very elfectivc
t.
. . r.ll,J"t- Io enforcL. \onrrul over
r(, actuJt re-ulr\ .rn thv shop i.f.
f.'.aj"_'"")
lloor. Thc"charL
. :.:
-r,. 1. ol
1,roducrr.,n. an,t .,ccordingiu, ,r"f
a..,,"
_r:i: ,Atr,lrough rve tlrrtl ojffercnr ,ip"" ;ie.l";,
_
I
,l I.rrc toad chal'l rnd rht.rcherlul.
:,.c lor
- - tr-e. charr. lu,td
m"clrines or dcpartnrcnt.. ff-],.
- be -chcduled ro -r.rrr, af *""
, nj ,, Irl;;;l ,_';;;.::;
'
.r 'he,dle rime ro o\...r. A ..&r,,/;;",;"5;,;;:
--
' p.ogre'. ln;r s6fieflxlp.,rr,:,. ,-,r"'r.,:,',.ri .'rjl
:r.ss, rvhile the horizonral
. ,.rm ofrecords charts, rn4rich ,"p."."n,..',;;: ;"
"*i, ,r".r. irr"'r.,r"i,,_l
, .:.jared_ at regular intervals, for instancc,
, or when wor_k continues t
--:la1'ed,
rvhen
.,. lrk is not
as per rhe actual plan."),",rJ
i;. ;;;;;
if
, :_-::on may have to bc taken and this,rilf ,"i.r"r""ll
, .. :r chart. "i;;;;;
: Gantt chart lists, on the vertical
axis, all the tasks
. , .ingle rask idcnrjficrrjo" i i.f, ,.'""fiu.."r;.,1.
- " , ,";"
r.r' .rxrs o[ rhe ch.rrr indicrre.
i;:;;
. per:orr, r,r ho Jre J.sitned io
U;;
. "nd ,t iof.
1( orher column .hor^s rr" ,i",",rrr",iJ""
ii"""
r"rirr!
. .no!. borh the e.rimared st.rr( .lnd
:::.ererrr colour: f for airrlncrio,,r.
end rime
ili;:;,,,,:,J"
-. : lorver chart
- .:- .ection. rhewhich shows pcrsonnel ailocations
rcr tical aris c6n1.1inr ,;; ;;;;;
- : :-i:C the cojumns indicating ,*k
' : :r.te person assigned. d"*;;;'";;';;;
. - - h -r ,r h jch indicare.
The graphics .""ri;;. ;;;;;
rhai rhe p. rson i, .,"c,r1,""
.,rr i- evidcnt when jr shorv,:,.,.i
' Lhey are not actu.tlly rrorling ,,,n.'f"r',i,!
on.rnu n,,-r;".,'
''' Cantt Charr. ,,r" jir.u r-"d"b"lo;.' I '"'' '

- -..:rensive method
- rrr ,-,f rrrining. and can be developed cven bv
' . :.-:ided rime and work
schedule for.each job.
 146 production and Operations Managemenr

3. Monitoring and control is easier and can be done within a

and at the lowest cost.
4. These charts can be changed and updated quickly at a lower c
-
5. There is no need to develop customized Gantt Chart Boards a: rl
Boards are available in the market.

Figure 5.1 Gontt lood chort

Disadvantages

1. They do not show job inrer-relationships and interdependen-.

2. Cost implications cannot be shown.
3. With these charts, ir is not possible to depict other aJ
completion.
4. The shape and form of Gantt charts can differ according to
requirement. Fig. 5.1 is a very simple Gantt Load Chaft.

The above chart shows that Machine-A has been loaded till u.eel 5
and Machine-B has been loaded till the first half of the 4,, week ad
With computer support, Gant Charts (Fig.5.2) can nori. bc
software. One such computer generated Gantt chart drawn using
in Fig. 5.2.
 776 Production and Operations Managemei:

6.9.2 Synthesis Technique

Many organizations cannot conducr
rheir own rime srud,,. 1._ .*
due,to.rime and resource consrrains.
In order to lollorr : :
synthesize from published standard
d"," .n ;_";"q;;;=
lilil5-::l-o"rs, provide srandard ;y.r" i,,n"''"q,:,1i,1.
their own srudies. rhese aprrr, .o
"i;;;";:;,i;;;l
trme study data are available. sy"tfr"rirnl i.'"T ::l';.'
companies to approximate the
ti-"*rffi;.d, ;=
srandard ,i;" ,";"i.;;;";?*'
However, this runs the risk o.t _o_
inherent errors, due to no:._-_-E
of
^r.r.i,r -^-L
skilt. technotogy. work p,.."r;. ;;;';l;;il; i;'J;,ll:_;
whrch may be organizarjon_specific,
across aoun,ri"r.""'
''

6.9.3 Pre-determined Motion Time Stondords

This.technique is also used as rhe
basis for serrino -.
of going in ;;; ;,h".;;;h"::il:,,:.1
:9,1i:T,'.","11 -listead
maintain,that their previou"s tirie stJi ;.;;; h5il
r ffi ;.:
time and cosr 5aving, bur again, i, runl
T:y^i::rl:
ti me lag. s ,ilo
' ::'-
tandard ri me .equi."me'',,; ;*t;;; :, ;:i: :jl,t"
processes. or due ro rechnological
changei in ,,h" l;ij;.
6.9.4 Anolyticol Estimoiing
In some work, because of its na
difficult to develop
a time study. Mainrenance. ,o","-11":i!-',:
.r-.,^r^__^_- =:
room lobs, research and dere-::n

"";;il ;f:;;;;il r"l"};

lilill:
dwet opment, etc. are typicar
and creativity, these problems
:::.J:j]:: rechnique ar"?J."a =T
..,*
estimaring is used. The ,".h;i;" ;;li;; ;;;;
study specialists, who also make use ..
of aur" .yntf,".i, i;; . .o
Analy.tical estimarion is difficult
i" ani'i,'i.";";;,i; .
as job measurement is difficult
if the "",rr"
;ob Jcreit;,;;;r."
=

6.IO CONCEPTAND DEFINITION OF ERG

'Ergonomics' is derived from
tl words 'ergor" mea..:ri
meaning laws. It is the studv .l".st::I
I the eflecrs ofa work sysrer: iE
er ft''i-_ the
at itting ,1"^...^-r. ., m;n ,.
work -ro the ir*""r" ,i.i. iiri".i.l:l'.:i
defines ergonomics as ,,the
"^ll:]to *]lh engineerrns ro the *o.ke.
"ppCri", r,l,
,"i "r
n.irnr_
::ll::,]"1 ""r1.
:::,::1ii,:T'.um sarisfaction tor rhe work *ti.r,, ., i:-=-=.
productivity.,,
 177

'-
: :-O definition provides a more meaningful basis for
:- =:.onomist, for effective accomplishment of work,
nr ' -. r.:::n (rvhich broadly includes the tasks, working
-:--: . and *'orking space), with the capabilities and
- '---; ::ocess, he tries to ensure job satisfaction for the
{ -. -:::;.s their productivity.
r ,:-: :: ::- all schemes of human activity, be it in offices,
-- :-: :'.en in space. Some ofthe areas where ergonomics
ilf-: :: 1_::
:i .i,:: and hand tools
_: t-:-:ng systems
.

"-,
""-' :::: ::sts
::-its and steps
sten for operators
- --: :l:,:,ures

. . -: :::ditions and environments

1* :-, r r ilorvances for workers
-" : :.::::Tlent of personnel
i", r:.
*--,-' ':-_-::. the areas of ergonomic investigation ofa work

r:l:i
--:-:::ometric data, personal background, education,
' ::: ser. intelligence, aptitude, reaction time, interest,
- - : :i
-
- :emperament, attitude towards work, motivation,

--: -:ads, mental loads, displays and warning systems,

:rrir' ::
- - :: -::uts and outputs.
-, :-:::rpass workplace layout, postures, motion and
L- - ::::lnv and relaxation allowances, comfort, safety and
- - - :-.r .rift work condir ions.
rmR,,::- :::rperature and humidity, colour dynamics, fumes,
lltnnL -:r: :,rdscape, scenery and garden, cleanliness and

.: - -:rar engineering, human factors in engineering,

--:..:: experimental psychology, applied and human
--- *-::-:le svstem analysis, etc., are used to designate the

:":: :-::1e World War II through the coordinated efforts

-::: r:: design engineers. Its earliest application can be
 t7a Production and Operations Management

traced ro Frederick Winslow tavlor (1g56 Iql5).

Tavjor.s experimenrs werc .
to arrive ar the optimum design of equipment for specific
types of work anci :
workers ro suir rhem lor each rlpe oi task.
(1869 1e24) and his wife Lillian, elaborated the
p:::,
^"TTl^lr:l::
of motion economy"ilbreth
and introduced the idea *r; ;;;;r";;i;0".j, -;
"f then, with the advance::-.:rr
work.to reduce fatigue and eriminate stress. since
phvsiologv. p-.ychotogy and merhod study. rhe subjecr
::p^":i3"ilrl
rnro.
detve: :,=
tne numan make up for berrer and scienrific under,randing
of the .-:=
working conditions and environment on the human body
and mind.

6.10.1 Impoct of Ergonomics on Work Study

Work study, which aims at scientific analysis of a work
system to -,:
productivity and satisfaction at work, is depenient o.,
for reser:
on many facets of human reaction to a given work situatiSn.
"rgo.rorniaa
Such input in:: _
makes the task of the work study praJtitioner *o."
,.i"niin. and resul,_-_
Such input information/data mosily relates to the
following areas,
. Limits of sustained physical endurance, normal ,p"""J,
of move:::T
optimum method of handling of controls.
. Receptivity to sensory inputs and time required for perception
. of de,,_.::
Reaction time for motion output and time required
io. eu'uluution e I -
making.
. Anth-ropometric data to guide the design and layout
of equipmenr. .r
and furniture.
. Effects of different types of environmental conditions
on the hurra
order to generate improvements.
. fffecls ofworking conditions so as to raise the standards of comfor:
health.
. Qualitative and quantitative analysis offactors contributing to indus_:;
for computations of 'rela_ration allowances,

6.10.2 Ergonomics ond Monogemenl

Ergonomics is a discipline available to management from
the plannin= ::x
stage of^a work system. In the organization -and
control of human e::_ r
to specific ends, management needs to have an app.e.lation
of the h-:.a
in a,work system. Ergonomics also has
Tvolv.ea
-a
lltuati,o1loading--"g",i"i
p",r:;;;", ".i j::'5TJ
irnpo.,"* nnuence :r
i"r'"';,- i,'lT:i,',lii
tr

mental that may arise from the perusal

normal -a "uaulio., of r.::r:l
of rn". o.tun;"tion, thereby highlighting
.activiti"es
the equllrbrium state. This will permit more effective
.",i'inl'J,l
appliiation of ma::.;
to really imponant problems over a wide span. In
otheiwo.;r.
in increasing the productivity ofmanagerial brain power. ";g;;;;
this single ir::u
 h..-r':r{ :---alvsis and Project Management 203

EORMS OF NETWORK ANALYSIS

ur::-L :a \envork Analysis, which may be simple or complex,

nr ::;, le exclusively designed for specific t)?es of projects.
ir": ::r :,lsi rvidely-used techniques used in Network Analysis.

vethod (CPM)
ers: ::: :lanning, scheduling, estimating and controlling
::r- .--.is method was used by Da Pont in 1959 to schedule
t;::.i:'i:j during changeovers. The lessons learned through
.::- --\=tr for planning purposes, building and construction,
;1 - r- lrolects.
scheduling and controlling complex
=:-:-::e of planning,
r:j:-:---' using arrows to represent specific jobs. Such line
x.r:[::j:s of every task to every other task; this cannot be
-';.::- .-i's are those jobs which relate to one another (from
::.: depending upon the completion of the one before
:E-:.-:: :s the summation of the time to be taken up by a
r::':-::ian one crirical job in a pro.ject.
3,or ::=am illustrates the jobs to be performed to finish a
:::ing and costs. Once all these elements are specified,
*r: ::s. of the project can be determined by adding the
-:e :::sequences of various managerial decisions can be
'lf E: -::,:afi.

que
; ::sed on critical
path scheduling. However, there
:r-,i een PERT,/PEP and critical-path scheduling. The
irl-'a-.: iihere there is no established system for doing rhe
: :r.-; :or estimating the required time to complete each
urha ::- -re other hand, is usually applied to jobs which are
rn:c :t:,.:e and where it is possible to predict performance
r;r-: ;::histicated mathematical models must be used in

s-:.=-: r. follows:
::ir -: i:-:grostic an d prognostic; it is used to quantify hnowledge
:: ---.-.:..:;ing intellectual and physical activities, essential for
:,';:lines. It is a technique for focussing mqnqgement's
r!; -.;^:-: -emed.ial d.ecisions, and on at eas of et'fort which hat'e
 Production and Operations Management

trude-offs in terms of time, resources or technical performance, ruhich might :-:

to meet major deadlines.
The PERT technique is, therefore, based on rhe concept that in any p:--_:
are three variables:
(i) time
(ii) resources (HR, facilities, funds)
(iii) performance specifi cations.
Any one of these may vary within the limits established for sui:, :
while holding rhe other two consrant. For example, holding time :-::
constant, the requirements for resources may be determined.
It is, therefore, clear that both PERT and CPM have similar:--:: n
conceprs and merhodology. We use these techniques in project sche::_
Hou'ever, r'e use PERT in analyzing project scheduling, where ::-
is not cenain, and CPM, where activity durations are known ri-,:-:
essence, therefore, PERT is probabilistic in nature and more apprc::
R&D Projects, s'hile CPM is a deterministic technique, which finds a::'-
appropriateli' in construction projects.

7.2.3 Grophicol Evoluotion Review Technique (GERT)

Graphical Evaluarion Review Technique (GERT) is known as a sr..:-:

analysis technique. It is based on probabilistic treatment of network,:.-
duration estimarion. GERT helps us establish a logical relationship :t:
activities. The GERT technique u'as first introduced by Pritsker .-,1:f "

GERT can eliminate the inherent defects of PERT/CPM, identifrj.-..

need not be performed, it is not used rvidely because of its comple)::

7.3 BENEFITS OF NETWORK ANALYSIS

Some of the benefits of network analysis can be enumerated as fol-:'::

1. It helps reappraise existing systems and identily duplicarior_ :*-c
that may detract from the effectiveness of the system design.
2. It helps management to evaluare the sub-systems and their :::
networks continuously, consistent with the over-all objective: ::
3. It allows an evaluation of the impact of various sub-system :,
sub-systems and/or the total system. A change in type of out::: r
scheduling in a particular sub-system can affect operations in ::-E
effect can be determined in units of time, monev, facilities o: : -_:
4. It encourages introspection of an existing system or provides ::-: :
visualizing the make-up of a proposed system.
 ' 'r.rt\sis and Projecr Nlanagement 205

\:TWORK ANALYSIS
' : :.:-.:tits of network analysis, it has some inherent defects

. : :: cif-ective system design, as variations in performance

i trlnger of assuming relationships among segments

-:!-lring important relationships which should be
. - ..::ring relationships improperly.
,-up as the relationship between the segments
mav

l'. :"'.) CONCEPT OF FLOAT

, .. iime to delay an activity without, however,
deialing
' .;r. It means any possiblc delay in some activin, oi
-'arrorr of rhe projecr. Horrerer. ir ir inrporr.nr ro
.
.
activities can
. i:.Jn time ofthebeentire
I : delaved. Delaf ing critical activities
! project. The term ,float, can
rtargin, excess rime or flexibility. We can calcuiate
: ,. orks, rhese are the Activity-On-Node (AON) and
'- Lhe ntcrhod,. horvercr, will give similar resujrs.
: ::-:s: independent, frec and total_ An independent
. ' :e started latc and finished early. Because of this,
:::n become negative. Free float on the other hand
: . .i hich acrivity cam be delayed, without, however,
' .::riities. Sone of thc characteristics of a free float,
-. activity, the minimum of the floats must
' -:cceeding
, :. s less than or equal to the
totai float. Therefore.
: .t ahvays zero. Total float shows rvhich activities
,: . .', ithout delaying completion of the project.
In a
- .,e hate to \tJfl succced ng acriritie. on time.
. - . ::::., ities, we have to consider the minimum. For
It' :: and the free float are alu,ays zero-
-'::hods ofcalculation of {loats. wc follow differenr

:a LS
. ES) D (EF)
r :F) D (EF)
 Production and Operations Managemenr

where,
ES stands for earliest start
LS stands for latest start
EF stands for earliest finish and
LF stands for latest finislr
G stands for early start of successor activities
D stands for early finish of existing activity
For calculation of float under the AOA method, we use the follor---:r
Independent float (lF) : EF_LS
Free Float (FF) : G (ES) -D (EF)
Total float = D (LF)- D (EF)
Formulae are:

1. IF(i.) = EF(j) - ES(i) D(i,j)

2. FF(i,I = EF( ES(i) D(t, l), (If there is more than one act;
thereof)
3. TF(i, j)-l,F(j) ES(i) -D(l,j) (If there is more than one acr:'
thereofl

Apart from all the floats mentioned, we have the interference float.
as the difference between total float and independent float.
Let us understand the interference float, using a simple examF.'-
XIMB Bhubaneswar has organized an international conference ar rh:--
they are expecting nearly 2000 experts from across the counrn :-lt
The conference is scheduled for 15'i' to 19'r'July, 2012. The insrii---:
for the travel of delegates by air. Bhubaneswar has a small a--':r:
flying operations. The institute has to arrange for special flights ::
July onwards, and for departure, from 20't'July onwards. Bhut.---
temples, and has a lot of sightseeing opportunities. Expectine :-':n
leave immediately after the conference, from 20th July, 2012 onlr -=
flight availability, and that some guests would opt for sightseeir::, r+
the floats as under:
Suppose a delegate decides to delay his,Aer journey for shopp:.-.-=
for a day; this one day is called independent float. Any time be,,.---,:
actual conference timing), would be considered as the total floa:
float is the scope to modify the sightseeing time, depending on ---
delegates.
Thus, for a project, consideration of floats helps us decide ri'hi:
given priority, and which has to be rescheduled. Floats, therelc::
the project with resource optimization by manipulating the :r,:-r
non-critical tasks.
 -- I -! ::ralvsis and project Management
207

\ETWORKS

or. jobs
.4-"::i _(tasks or operations) that are performed in
,-- ::3 logically
:rLfl' or technologically. J"."i|.", it
.'- r .-cific acrivirjes rhar cJmprise f"iti"ffy,'
,h";;;;;'rnJ;;";,
r-, - :o \\'e can illustrate this - ^
with the loliowing
. -':. J\C machine has been procured from ;bro;J "r"_pt",
'a;;
-. i:: activity starts with the procurement of rnanpo*",ir
:-- ':.: jrm from which the machine has been or.i-rr"al
--:.- rork doing elecrrical work. insralling rh;.;;;;,
-- : ::.:-',, the trial run. The various activiii"."r"q"r."i
: -:-:-::d, time-wise as below (Table 7.1):
i't"
ll-::* .::: precedenCe
a CNC Machine
,r:i-- ::-: a
Immediate
Predecessor(s)

:;:'::-.:ndation

-: ::: a particular activity indicate that those activities

':: :.:ore the starring of this job. Once the activities
( :--: - .:::r-relarionships are identified,
*a arn srrohi.rliu
r L- . :agram. We can depict rhe nerwork ,r;" 'Fi;. ; i

=g-r= r1 A nehuork diogrom

c,: ::.:.::.-al representarion of rhe acriviries in a oroiecr.
- ,:r:3 sequence ofdepicting interrela ionsh ipr'r;;;;
r
 Producdon and Operations Management

the various activities and events ofa project. Activities are physical r-,:
part of a project, and are represented by an arrow in a nitwork :::-
of an activity' is represented by the head of an arrow, while the t:-: s
the tail of an arrow-
In a network, an event indicates accomplishment of some task. l-:,:
ending of an activity are represented by events (initial and termi---:-
as a node. We indicate nodes by a circle, and number it using the i
In line with Fulkerson's Rule we follow the steps as undei to .-_:
which help us to correctly draw the network diagiam.
. Number the initial arrow as 1. Initial arror.v has no incominE :-:
have outgoing arrows.
. Represent each activity by a single arrow.
. Maintain precedence relationships among the activities.
. If required, include dummy activiries to maintain preceden.: ::
. Avoid looping among acriviries.
. Create nodes from the initial node (at least more than 1).
consecutively.
-j:
. Repeat the process to reach the final node, where all arros
=

Figure 7.2 Nehvork bqsed on Fulkerson's 1o.,.

In PERT, expected time of an activity is determined by using r.-_: :

(to + 4t," + tp)
.
'u- 6-
The variance of an activity can be calculated as:

, l(r, rnrlr
l6l
Process and rules of drawing the diagram Notice we have o:_i. e
end event in the diagram. Time requirement in the diagram flc..i:
 .,--:-. ::i\'sis and project Management

-: :-:;ence. Each event has been given a unique number;

--.:-= -abel, that is, head and tail event numbers. Some ,,.,i
---_ :: n
- ,f are :

: :::resented by a single arrow. Thus, a single activitv

- ,.::e in the network.
:--::cular activity, all acrivities, preceding it, should be
-: : __::bers, and hence, duplication ofevent numbers must

-: - .:. : ,.rne initial and one terminal node.

b :-:::tr where more than one activity needs to be
! - _ ,::_. We call this a situation of merge event. Similarly,
! - - -::: more than one activity needs to be simultaneousiy
. -: _ :aring intervening relationships, are prohibited.
l:r, L- :: -:aorporate a dummy activity, when two or
more
uc.l- - :::lecessor and successor activities.
: i--::',ities In a network, we are required to use dummv
. - : :r rrore parallel activities have the same
r:' -. --:tion wilt remain i"'.;pT; ;ilff"[iff:::: head or tail
r- - .- .--.: ir is indicated by dorted ljnes.

],.CGRAM SYMBOLS
o .'- : . . _-:l in the network diagram are indicated (tnFig.7.3)

activity (rask ro be carried out in rhe projecr)

a *n'"h occurs on completion or a

,?o"lt l;iit"
ft.

Job X must be completed before Job y can sr?rr

210 Production and Operations Management

Z is a durnmy activity, it is
dotted line. It is required to a,;..1
having the same head and lail ei:*

Figure 7.3 Common symbois used in nehvork diogr:-:

Some of the situations that we face while constructing networi

presenred as follows (Fig. 7.4).

8,,
o
.------------.. ^-/ A mu\r fini(h hefore errhrr B or C cjrn \rrn
Q- C
\
-{. --'*
^ r-
both A and B musl finish before C can sur
.rF
-9,.
\ \ B,,-'
a)--l borh A and c murr fini:h before eilher B or l
,tv\D -\
c,./
A^B
--------------t{ )----------}
Y
Dummy A must finish before B can start. boih A ai1 :
must finish before D can start

cAo

->(,/------------>
Figure 7 -4 Vorious siluolions presenled in nehvork dic-o':-

The dotted arc in the last case represents dummy activity. Dumlnr
zero completion time and represent those precedence relationshiPs
represented easily considering the actual activities of a projecr.
(N (N$,rs-iq\'\s (qttqd atcs \t.' Ret Nctk dite.tattrs-
 Network Analysis and project
Management
271
- : PROGRAMME EVALUATION
AND REVIEW
TECHNTQUE (PERT)
- - : . e so far discussed
,,
the methodology of scheduling rimes
:--: : :ath and the project of different activities,
t"ngtn, ;,*,,r;,:r::,;"
.-.r '.. activity times are ".*iii,i-g known ard constanr.
known and.consr.,-', B;l *i,
u : ::: PERT, as there is every possibility J:"_pd;r,rg "rlr-p,,." does not hold
:- - :- :iere may be some unplanned a"f"y. job before the expected
*". "
rf.,rr, i,irr".i"oil.uing,
-.i! be rhree estimares for an acrivitv single esrimare,

u" ):rimistic Time (a) This^is the shortest.rime

:. .'rmpleted and is therelore an ideal estimate a parricular activity carr take to
r llrst Likely Time (m) This is the modal
dme whicil
""'-" is
: :cmplete a job and is based on p"r, ,"lo.ar.' ', expected to be taken
: i:--simistic Time (b) This is ,t" tong"rt
'-: a probabirity ri-" an acrir.iry can rare and it occurs
of ress than one per cenr. This, rhereiore.
:,: ::.tate, for any eventuality. is the rvorst rime

': :,- :.e three time estimates,.

1l{lll
a single expected time to complete
o!,:."-- :C with the following*"ignr"d;".";";;;;i;, '" a project is
._:nt+b

! -:::. r = expected time ofthe activitv

: optimistic rime
= most likely, or modal time
= pessimisric time.
,-- :=:d deviation, of the
completion time of an activity is calculated
as follows:

(b-a\
6

: RITICAL PATH CALCULATION

path carcuration guiderines given

*- -.---*..i,i."r above, let us now solve the
212 Production and Operations Management

Task Dependent on Duration

A 3
B 6
C 3
D 5
E C 2
F B,D,E 6
G 9

Calculsti.on of Earliest Time:

Let us first draw the diagram as follows:

Figure 7.5 Nehvork drogrom lo co/cu/ofe lhe eorliest lime

Let us now calculate the earliest time, both for events 4 and 5.

Solution to Calculation of Earliesr Starr Time for Event 4:

Activity Preceding ET Duration Calculated ET
2,,)4 3 5 8
1)4 0 6 6
3 -4 3 2 5

So the earliest start time for event 4 is dav 8.

 Network Analysis and project Management 213

: ,.urion to Calculation of Earliest Staft Time for Event 5;

---s solution builds on the previous one _
the earliest start time for event 4 was day
. ::-erefore
Preceding ET Duration Calculated ET
- *5 3 o 12
- _5 8 5 14
' :--.e earliest start time for event 5 is day 14 (by this time all the precedi
ng acrjviries
..rv e been completed).

- -.;rion of Latest T[me

.. -; once again redraw the diagram as under:

Figure 7.6 Neivork diogrom used lo co/cu/qie fhe /qtesi fime.

' . ;. 7.6,let us now calculate the latest time
of events 2 and l. Solution to
: : :r Latest Start Time for Event 2
Prec ET

;:!: ;:art time for event 2 is day 3 (by this time, the minimum amount
of
- -- -:: is Ieft to complete subsequent tasks).
 producti.on and Operalions Management
zl4
Start Time for Event 1:
Solution to Calculation of Latest
one - the latest start time
for even:
This solution builds on the previous
3 therefore:

(by rhis time the minimur:

q^ rhe latest -iart lime lor event I is day 0
subsequenr
:#i;';;;;;l' t'ri io
'o'npt"'" b"
'"\'), , -., ^ an error ha:
(othen";ise
Note that the latest time ot e'v-entirnu't "'o

Figure 7 .7 Drowing the criiicol poth

7 .9.1 Feolures of Criticol Poth Anolysis

effect ive toc ::-
oarh analvsis is the mosr
In project management' critical
(&;i;"' the lollowing
^'^ipcr. critical Da(h anarysrs activities for making up "':""tli'-lT:---
ut]'' a larger prott-:
arolr, r-'^'utl indiu'du't n"*':b",-"lS:.::1f':l;""
: li; fi;;;; Lrrs *"v
' ( IPA snowsexPlains w4r Lrr*! --'"i
'hut
acti\'lties
the order irt" activities'
..,'--'-*s
it shows which acr:''
.' CPA also
ii"." "*" "lrter activities are complered
activiries-tun U" a"nt :]1"lyl":Y:lli proii*
t-
'. cPA
bPA orrecrs wrxLrr aLu'i!!'--th"
dir".,, which
totpl"tion ot the total
lor the t-:l'll:::i:""";;'.iul.ou.,.,
:::.-
can reduce rhe overall time lhereby r'
. CPA also helps in,;u"r-rn-trme resource planning'
inventory holding'
 275
\erwork Analysis and Project Management

r- --. for identification of earliest start

---:l nath nodes are numbered
latest finish time (LFr) for the immediate
J: ;;i;il;;J,;;
l-,- j o"n there must not be any crossing activities'
which are very
f;
--
=-.::r{ critical acriviries' mimmlzes
:- -..,pt in time and resource optimization' and thereby
tr :- :::'e.t comPletion. f,"1 jlil
ir -:. l?.\, it is important to estimate the- time Some
:t"pttd.
of rhe grven
: -je to completion'
time from commencement
.----.':::ons for CPA are:
:; :: :-. resource inPuts
: :::lanpower
of materials and other services
. .'.tl"bilitv
- .--otion iue to industrial relations problems
rr : -o:-,ption due to natural calamities'
analy:it'
:: -,::cn of the critical path, through criticalin path :-" :Tl^:
no delav in the project
;*;-;;gt the critiial path, reiulting
i"-*--.- noJ,, the time along the criticai path is the minimum time critr;J
complere the activities aJong the
tr!: t*po'""t' incurring "dq":gj::j:r]:
-.::ssary to utilize
"tt'"
;=; :.r;: ;., ;;;1;; ;""rall time saving for proiect compledon
: --i ihe extra cost burden'

nt Chorocterisiics of o Criticol Poth

'a ::1. ;hould have a critical Path'
:c-^::k may have more than one critical path' more
,..- ,r'.""'"iir." lonn".ting links (in a network' we may have
,,---".rng ri"tl, between the initial "?d:"trntl-11-":lt:11,.".,-. ,.
-a;;;'"t;;i;;-critical path may be less than the activities in a"
::L:L':..
. r,i::. ::av have dummY activitY'
-= :etermines project duration time'
;.;::
. :rti."t p"th ut", by nature, critical activities'
r:^,# ffi;;[i";" shortened' then activities on the critica]
-: :t shortened.

io orrive ot lhe criticol poth in o network

'rtr-.i'::k enumerating all the paths'
E:-,::es on each of these Paths'
:c ;---:rities along each Path'
216 Production and Operations Management

. Identify the longest duration along each path. The longest duration is obr:
the critical path in the network.
Let us now try this problem. In the table below, we have given optimistic (a
likely (m) and pessimistic (p) time for the completion of a project. Comp::=
expected time of project completion and draw the network to show the critic-
(please do the drawing part yourseli)

Tie - a+4m+
bl6

After you draw the network, check whether you are getting the criricz-
7-2-3-5 7 8 or A-B-E G-I. Summing up the time, along the critical
expected time for project completion or project length would be 37 dal's-

Variance of the expected project length

= 419 + 2519 + 6419 + 1619 + 119 = llol9 days

Standard deviation of expected project length

= lll019 = 3.496 days

7.9.4 Differences between PERT ond CPM

Both PERT and CPM ultimately lead to the same end, the only differenc= r
treatment of activity time. PERT considers activity time as a random rz:
however, considers a single deterministic time value for the activities.
focusses on an exclusive time variable, whereas CPM considers the
time and cost. CPM is applied for repeated projects, as leveraging o'.r: