Operations Management - Project Management

I 94 section 1 OPERATIONS
STRATEGY
ANDMANAGING
CHANGE


ADVANCED PROBLEM
12 Assume the network and data that follow:


NORMAL CRASH
TIME NORMAL TIME CRASH IMMEDIATE
ACTIVITY (WEEKS) COST (WEEKS) COST PREDECESSORS


A 2 Sso 1 $70
B 4 80 2 160 A
C 8 70 4 110 A
D 6 60 5 80 A
E 7 100 6 130 B
F 4 40 3 100 D
G 5 100 4 150 E,F



a. Construct the network diagram.
b. Indicate the critical path when normal activity times are used.
c. Compute the minimum total direct cost for each project duration based on the cost associ-
ated with each activity. Consider durations of 13, 14, 15, 16, 17, and 18 weeks.
d. If the indirect costs for each project duration are $400 (18 weeks), $350 (17 weeks), $300
(16 weeks), $250 (15 weeks), $200 (14 weeks), and $150 (13 weeks), what is the total
project cost for each duration? Indicate the minimum total project cost duration.




CASE: THE CAMPUS WEDDING (A)

. . fIIl!J On March 31 of last year, Mary Jackson burst into the
family living room and announced that she and Larry Adams (her
Father: Ugh!
Mother: And catering! It takes two days to choose the cake and
college boyfriend) were going to be married. After recovering from
the shock, her mother hugged her and asked, "When?" The follow- table decorations, and Jack's Catering wants at least
ing conversation resulted: 10 days' notice prior to the rehearsal dinner (the night
before the wedding).
Mary: April 22.
Mary: Can I wear your wedding dress, Mom?
Mother: What!
Mother: Well,we'd haveto replacesomelace,but youcouldwear
Father: The Adams-Jackson wedding will be the social hit of the it, yes. We could order the lace from New York when we
year. Why so soon?
order the material for the bridesmaids' dresses. It takes
Mary: Because on April 22 the cherry blossoms on campus are eight days to order and receive the material. The pattern
always in full bloom! The wedding pictures will be needs to be chosen first, and that would take three days.
beautiful.
Father: We could get the material here in five days if we paid an
Mother: But honey, we can't possibly finish all the things that need extra $25 to airfreight it.
to be done by then. Remember all the details that were
Mary: I want Mrs. Watson to work on the dresses.
involved in your sister's wedding? Even if we start
tomorrow, it takes a day to reserve the church and Father: But she charges $120 a day!
reception hall, and they need at least 17 days' notice. That
has to be done before we can start decorating the church, Mother: If we did all the sewing, we could finish the dresses in
which takes three days. An extra $100 contribution on 11 days. If Mrs. Watson helped, we could cut that downto
Sunday would probably cut that 17-day notice to 10 days, six days, at a cost of $120 for each day less than 11days.
though. Mary: I don't want anyone but her.
Father: Ugh!
Mother: It would take another two days to do the final fitting.It
Mary: I want Jane Summers to be my maid of honor. normally takes two days to clean and press the dresses,
but that new cleaner downtown could do them in one day
Father: But she's in the Peace Corps, in Guatemala, isn't she? It
if we pay the $30 charge for express service.
would take her 10 days to get ready and drive up here.
Mary: But we could fly her up in two days, and it would cost Father: Everything should be completed by rehearsal night, and
only $500. She would have to be here in time to have her that's only 21 days from now. I bet that will be a busy day.
dress fitted. Mother: We've forgotten something. The invitations.

PROJECT MANAGEMENT chapter 3 95


Father: We should order the invitations from Bob's Printing Shop, Mary: We need to get gifts to give to the bridesmaids at the re-
and that usually takes 12 days. I'll bet he would do it in hearsal dinner. I can spend a day and do that.
five days if we slipped him an extra $35. ~II' III
Mother: Before we can even start to write out those invitations, we
Mother: It would take us three days to choose the invitation style need a guest list. Heavens, that will take four days to get ~
before we could order them, and we want the envelopes in order, and only I can understand our address file.
printed with our return address. Mary: Oh, Mother, I'm so excited. We can start each of the rela-
Mary: Oh! That will be elegant. tives on a different job. i
Mother: The invitations should go out at least 10 days before the Mother: Honey, I don't see how we can do it. Why, we've got to
wedding. If we let them go any later, some of the relatives choose the invitations and patterns and reserve the church ~

would get theirs too late to come, and that would make and.. .
them mad. I'll bet that if we didn't get them out until eight Father: Why don't you just take $1,500 and elope. Your sister's
days before the wedding, Aunt Ethel couldn't make it, and wedding cost me $1,200, and she didn't have to fly people
rl

she would reduce her wedding gift by $200. up from Guatemala, hire extra people, use airfreight, or
Father: Ugh! anything like that. 11.1


Mother: We'll have to take them to the post office to mail them, and QUESTIONS
that takes a day. Addressing would take four days unless 1 Given the activities and precedence relationships described in ~II'

we hired some part-time help, and we can't start until the the (A) case, developa network diagramfor the wedding plans.
printer is finished. If we hired someone, we could probably 2 Identify the paths. Which are critical?
save two days by spending $25 for each day saved. 3 What is the minimum-cost plan that meets the April 22 date?


CASE: THE CAMPUS WEDDING (B)


..8 Several complications arose during the course of try-
ing to meet the deadline of April 21 for the Adams-Jackson wedding
4 The lace and dress materials were lost in transit. Notice of the
loss was delivered to the Jackson home early on April 10. :1'
rehearsal. Because Mary Jackson was adamant about having the 5 There was a small fire at the caterer's shop on April 8. It was il~l:

weddingon April 22 (as was Larry Adams, because he wanted her to estimated that the shop would be closed two or three days for ~

be happy), the implications of each of these complications had to be repairs.
assessed. !IJi
Mary Jackson's father, in particular, was concerned about expense
I On April I the chairman of the Vestry Committee at the and kept offering $1,500 to Mary and Larry for them to elope.
church was left unimpressed by the added donation and said
he wouldn't reduce the notice period from 17 to 10 days. QUESTIONS

2 A call to Guatemala revealed that the potential bridesmaid I Given your answers to the (A) case, describe the effects on
had several commitments and could not possibly leave the the wedding plans of each incident noted in the (B) case.
countryuntil April 10.
3 Mother came down with the four-day flu just as she started
on the guest list.

50URC~ ADAPlED FROM A CASE ORIGINALLY WRITTEN BY PROFESSOR D. C. WHYBANK, UNIVERSITY OF NORTH CAROLINA, CHAPEL HiLL, NORTH CAROLINA.




CASE: PRODUCT DESIGN AT FORD



. :>8 Ford Motor Company is ranked second on the Fortune In this case, our goal is to give you a good idea of the issues re- II
500 list of the largest U.S. industrial corporations, based on sales. lated to planning the development of new vehicles at a company like
Fordcurrently sells over 60 different models of cars. Product design Ford. The data in the case are roughly based on how Ford actually
is a major activity critical to the creation of the innovative products approaches the problem, but due to the amazing details associated iI
thatensure the ongoing success of the firm. with developing a real car, we have considerably simplified things.
Ford has developed the Ford Product Development System A major challenge in planning the development of a car relates to
(FPDS)that is used to organize the activities required to develop the timing of the major events that must occur in order to meet the
and deliver a new car. The firm has great experience in developing launch date. The launch date refers to the date when the car is available
newcars, but the pressure to develop them quicker presents an ongo- for ordering by dealers. Consider the fact that for a company like Ford
ingchallenge. The automobile market is fast changing, with the de- virtually all of 60 different models that are offered are "launched"
sireof consumers quickly shifting. Ford's current process requires each year. Usually the year-to-year changes are minor with small
nearlyfour years to develop a totally new car, one that involves a new changes to body style and minor engine/drive-trainchanges. Approx-
bodystyle and powertrain combination. imately, every four or fiveyears a totally new car is introduced.