Operations Management MD 021
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This 23 page Class Notes was uploaded by Mr. Warren Lang on Saturday October 3, 2015. The Class Notes belongs to MD 021 at Boston College taught by Staff in Fall. Since its upload, it has received 15 views. For similar materials see /class/218048/md-021-boston-college in Operations,Information & Strategic Mgmt at Boston College.
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Date Created: 10/03/15
MD 021 Management and Operations Managing Project Processes Outline De nition of a project Network methods using deterministic estimates Probabilistic estimates Cost considerations De nition of a project A project is an interrelated set of activities that has a de nite starting and ending point and results in unique product or service Examples of proj ects include building construction introducing a new product and redesigning the layout of a plant or of ce PERT and CPM Network Methods De nitions Activity The smallest unit of work effort consuming both time and resources that the project manager can schedule and control Precedence relationship A sequencing constraint between interrelated activities by Which one activity cannot start until a preceding activity has been completed Schedule A plan that sets priorities determines start and nish times and allocates resources to accomplish the activities Project Management Using Network Models First two steps Describe the project a De ne project activities bDeterrnine precedence relationships Diagram the network a Nodes circles and arcs arrows b Activityonnode AON network 0 Nodes are activities and arcs show precedence relationships 0 Activityoriented Project Management Example St Adolph s Hospital Immediate Activity Description Predecessors Select administrative and medical staff Select site and do site survey Select equipment Prepare nal construction plans and layout Bring utilities to the site me0wgt gtwwgt Interview applicants and ll positions in nursing support staff maintenance and security Purchase and take delivery of equipment Construct the hospital Develop an information system m QgtUO u Install the equipment wwwma m u Train nurses and support staff u Network Time Calculations Earliest nish time EF for an activity EFESZ Earliest start time ES for an activity ES Max EF times of all immediately preceding activities Latest start time LS for an activity LS LF l Latest nish time LF for an activity LF MinLS times for all immediately following activities Calculating Time Estimates a Optimistic time a Shortest time during which an activity can be completed b Most likely time m Best estimate of average time c Pessimistic time b Longest time an activity can take 1 Activity s time re and variance 0392 With beta distribution a4mb Calculating Probabilistic Estimates St Adolph s Hospital Example Time estimates weeks Optimistic Most likely Pessimistic Expected Variance Activity to rm 1p time re 02 A 11 12 13 B 7 8 15 C 5 10 15 10 278 D 8 9 16 10 178 E 14 25 30 24 711 F 6 9 18 10 400 G 25 36 41 35 711 H 36 40 45 40 278 I 10 13 28 15 900 J 1 2 15 4 544 K 5 6 7 6 011 Analyzing Probabilities Probabilities can be assessed using the ztransformation formula T TE 0 T speci c time TE expected time path mean 0 standard deviation of path mean Assuming the activity times are independent the path standard deviation 0 is the square root of the sum of the activity time variances Z To determine the probability of completing a project in a specified amount of time Calculate the probability of each of the paths being completed in that amount of time based on the value of 2 For any value of 2 that is greater than 3 the probability that the corresponding path will be completed in that amount of time can be considered to be 100 If all paths are independent then the probability of completing a project in the specified amount of time is the product of the individual path probabilities Hospital Project Completion Probabilities How likely is it that the hospital project Will be completed in 72 weeks 72 Expected path duration Probability of m Z Path standard deviation completion in 72 weeks AFK 72 28205 215 100 AlK 72 33304 128 100 ACGJK 72 67394 127 90 BDHJK 72 69345 087 81 BEJK 72 43380 76 100 Analyzing Costs in a Project 1 Direct costs and times 0 normal time 0 normal cost 0 crash time 0 crash cost 2 Cost assumptions linear costs per unit of time 3 Indirect costs and penalty costs Determining the MinimumCost Schedule Step 1 Determine the project s critical paths Step 2 Find the cheapest activity or activities on the critical paths to crash Step 3 Reduce the time for this activity until the rst of a it cannot be further reduced b another path becomes critical or c the increase in direct costs exceeds the savings that result om shortening the project If more than one path is critical the time for an activity on each path may have to be reduced simultaneously Step 4 Repeat this procedure until the increase in direct costs is less than the savings generated by shortening the project Direct Cost and Time Data for the Hospital Project Normal Normal Crash Crash Max time Cost of time cost time cost reduction crashing per Activity wks SK wks SK wks week A 12 12 11 13 1 1000 B 9 50 7 64 2 7000 C 10 4 5 7 5 600 D 10 16 8 20 2 2000 E 24 120 14 200 10 8000 F 10 10 6 16 4 1500 G 35 500 25 530 10 3000 H 40 1200 35 1260 5 12000 I 15 40 10 525 5 2500 J 4 10 1 13 3 1000 K 6 30 5 34 1 4000 Totals 1992 22095 Hospital Project MinimumCost Schedule Assume Indirect cost 8000Week Penalty cost 20000Week after Week 65 Critical Bath Crash activity Project m Crash cost BDHJK 69 weeks Indirect cost change Penalty cost change Total cost change MD 021 Operations Management Lean SystemsScheduling Outline De nition of a justintime JIT system Characteristics of JIT systems Types of scheduling Scheduling performance measures Priority sequencing dispatching rules Scheduling in services JIT System De nition Justintime JIT is a dependent demand production control system designed to produce goods or services as needed and minimize inventories Environments for Effective JIT 0 Manufacturing Firms that tend to have highly repetitive manufacturing processes wellde ned material ows and reasonably high volumes use JIT systems because the pull method allows closer control of inventory and production at the work stations 0 Services Firms that tend to have repetitive operations reasonably high volumes and deal with tangible items can bene t om JIT systems 0 In general JIT works well in stable and predictable environments because there is little forward visibility Characteristics of JIT Systems Pull method Consistently high quality Small lot sizes Short setup times Uniform workstation loads Standardization of components and work methods Close supplier ties Flexible work force Product focus Automated production Preventive maintenance Enabling Customization using Standardized Operations Product or service customization has negative effects on both Predictability of demand Predictability of operations Since uncertainty in operations requires extra resources customization is inherently less ef cient than standardization However it is sometimes possible to increase operational efficiency even with customization using standardization strategies Standardization strategies include Part standardization Maximize component commonality across products Process standardization Delay customization as late as possible Product standardization Carry a limited number of products in inventory Types of Scheduling 0 Operations scheduling Assigns workers to tasks or jobs to machine work centers Operations schedules are shortterm plans designed to implement the master production schedule 0 Workforce scheduling Determines when human resources are available for work Common Performance Measures for Operations Schedules Job ow time The time a job spends in the shop Makespan For a group of jobs the time between the start of the rst job and the nish of the last job Past due 0 The amount of time late average job lateness o The percentage of jobs completed late Workinproeess 0r pipeline inventory expressed in units number of jobs dollar value or weeks of supply Total inventory The sum of scheduled receipts and onhand inventory Utilization The percentage of paid time spent productively Priority Sequencing Rules Single dimension rules EDD Select Job With Earliest Due Date FCFS Job That Arrives First is Processed First SPT Select Job With Shortest Processing Time Multiple dimension rules CR 2 Time Remaining to Due Date Total Shop Time Remaining SO Time Remaining to Due Date Total Shop Time Remaining Number of Operations Remaining Performance of Priority Sequencing Rules Earliest due date EDD Performs well with respect to minimizing percentages of jobs past due minimizing the maximum amount of time a job is late Performs poorly with respect to job ow time workinprocess inventory utilization First come first serve FCFS Perceived as being fair Performs poorly with respect to all performance measures Shortest processing time SPT Performs well with respect to average job ow time workin process inventory minimizing percentages of jobs past due utilization Performs poorly with respect to minimizing the maximum amount of time a job is late minimizing total inventory it pushes work to finished goods before it is needed adjusting schedules when due date changes due date is not used in the calculation of priority Critical ratio CR Performs well when we are concerned with global operation of a system of work centers Slack per operations SO Performs similarly to EDD with added advantages of a global view and accounting for the duration of the jobs Scheduling in Services Characteristics of services that have an impact on scheduling 0 Services can not buffer demand uncertainties with inventory 0 Demand for services is dif cult to predict 0 Scheduling systems can facilitate the capacity management of service providers Two approaches 0 Schedule customer demand capacity remains xed and demand is leveled o Appointments 0 Reservations 0 Backlogs 0 Schedule the work force to meet forecasted demand adjust capacity to demand
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