Project Scheduling Concepts Quiz

Operations Management

• Operations management is the systematic design and control of processes that transform inputs into services and products for internal and external customers.
• An operations system involves several activities that transform inputs into useful outputs using a transformation process.
• Operations management addresses issues pertaining to the transformation process which converts inputs into outputs that are useful, and could fetch revenue for the operations system.
• Operations as a competitive weapon includes operations strategy and project management.
• Managing processes includes strategy analysis, process performance and quality, constraints management, process layout and lean systems.
• Managing value chains includes supply chain strategy, location, inventory, forecasting, sales and operations planning (SOP), and resource scheduling.

Types of Organizations

• Operations management applies to various organizations including banks, construction, government, health care, manufacturing, retailing, transportation and wholesaling.

Processes

• Processes should add value.
• Processes can be broken down into sub-processes.
• Any process part of a larger process is considered a nested process.
• Each process and nested process has inputs and outputs.
• Example of process view for an ad agency: Input includes advertisement design and planning process; the central processes include the accounting process and the production process; output includes the output interface process.

External vs. Internal Customers

• External customers are those who purchase goods and services.
• Internal customers are those who receive the output of others within the firm. They are part of the transformation process.

Service Processes and Manufacturing Processes

• Manufacturing processes change materials in physical dimensions (shape, fixed dimensions, surface finish, joining)
• If a process doesn't alter materials in these specified ways, it is a service process.

Manufacturing & Service Organizations

• Manufacturing-based Organizations produce physical, durable products, outputs are typically inventoried, customer contact is typically low, response time is typically long and large, facilities are typically large and capital intensive, quality is easily measured.
• Service-based Organizations produce intangible, perishable products, outputs can't be inventoried, customer contact is typically high, have short response times, facilities are typically small and labour intensive, quality is hard to measure.
• Similarities between both include that they are concerned about quality, productivity and timely response to customers, must make choices about capacity, location and layout, have suppliers to deal with, need to plan their operations, schedules and resources to balance capacity with demand, and make an estimate of demand.
• Most firms provide both goods and services.

Value Chains

• Value chains are an interrelated series of processes that produce a service or product to the satisfaction of customers.
• Value chains may have core or support processes.
• Core processes deliver value to external customers.
• Support processes provide vital inputs for core processes.

Core Processes

• Customer relationship processes: identify, attract, and build relationships with external customers and facilitate placement of orders.
• New service/product development processes: design and develop new services or products from external customer specifications.
• Order fulfillment processes: activities required to produce and deliver service or product to external customers.
• Supplier relationship processes: selecting and facilitating timely and efficient flow of services, materials and information to the firm.

Support Processes

• Firms have many processes that support core processes, including new service/product development, customer relationship and order fulfillment processes.
• Support processes include supplier relationship process.

Operations as a Set of Decisions

• Basic decision-making steps include recognizing and defining the problem, collecting information needed to analyze possible alternatives, choosing the most attractive alternative, and implementing the chosen alternative.
• Strategic decisions include development of new capabilities, maintenance of existing capabilities, design of new processes, development and organization of value chains, and key performance measures.
• Tactical decisions include process improvement, planning projects, generating production and staffing plans, inventory management, and resource scheduling.

Productivity

• Productivity is the value of outputs (services and products) produced, divided by the value of input resources (wages, equipment costs, etc.).

Productivity Calculation

• Single factor: policies processed/employee hours.
• Multi-factor: quality or total value of outputs at standard cost/labor cost + materials cost + overhead cost.

Homework

• The recommended book is by Lee J. Krajewski, and Larry P. Ritzman from Pearson (2019).

Solved Problem 1 (Multi-factor and Labor Productivity)

• Multifactor productivity is the ratio of the value of output to the value of input resources.
• Labor productivity is the ratio of the value of output to labor hours.

Solved Problem 2 (Labor Productivity)

• Labor productivity is the ratio of output to labor input.

Application (Calculating Year-to-Date Labor Productivity and Multifactor Productivity)

• The data includes: Factory unit sales, employment hours and total manufacturing cost of sales.
• Data calculation includes the calculation of year-to-date labor productivity.
• Data calculation includes the calculation of the year-to-date multifactor-productivity calculation.

Demand Forecasting in Supply Chains

• Forecasting is the process of predicting a future event.
• Forecasting is the underlying basis of all business decisions.
• Types of forecasting include economic, technological and demand forecasting.
• Time horizons for forecasting include short-range (1-3 months), medium-range (3 months to 2 years) and long-range (2-3+ years).

Distinguishing Differences

• Medium/Long range forecasts deal with more comprehensive issues and aggregate-level data.
• Short-term forecasting usually employs different methodologies than longer-term forecasting.
• Short-term forecasts tend to be more accurate than longer-term forecasts.

Types of Forecasts

• Types of forecasts include economic, technological, and demand forecasts.
• Economic forecasts address the business cycle, and include inflation rate, money supply and housing data.
• Technological forecasts predict the rate of technological progress and impacts the development of new products.
• Demand forecasts predict the sales of products and services.

Seven Steps in Forecasting

• The seven steps in forecasting include determining the use of the forecast, selecting the items to be forecasted, determining the time horizon of the forecast, selecting the forecasting model(s), gathering the data needed to make the forecast, making the forecast, and validating and implementing the results.

The Reality

• Forecasts are seldom perfect.
• Unpredictable outside factors may impact the forecast.
• Most forecasting techniques assume an underlying stability in the system.
• Product-family and aggregated forecasts are more accurate than individual product forecasts.

Forecasting Approaches

• Qualitative methods are used when there is little or no hard data or the situation is vague.
• Qualitative methods include jury of executive opinion, Delphi method, sales force composite, and market survey.
• Quantitative methods use historical data and involve mathematical techniques.
• Examples of quantitative methods include naive approach, moving averages and exponential smoothing, trend projections, and linear regressions.

Overview of Qualitative Methods

• Jury of executive opinion: Pooling opinions of high-level experts, sometimes supplemented by statistical models.
• Delphi method: Panel of experts, queried iteratively.
• Sales force composite: Estimates developed and aggregated from individual salespersons, after review for reasonableness.
• Market survey: Gathering customer input.

Overview of Quantitative Approaches

• Quantitative approaches to forecasting include time-series and associative models.
• Time-series models include the naive approach, moving averages and exponential smoothing, trend projection and linear regression.

Time-Series Forecasting

• A set of evenly spaced numerical data, obtained by observing a response variable at regular time periods, is the basis for forecasting.
• The forecast is based only on past values, without considering other variables, and assumes the factors influencing the past will influence the future.

Time-Series Components

• Components of variations in time-series forecasting data include trend, seasonality, cyclic, and random.
• Trend component: An overall upward or downward pattern, often due to changing population, age, PLC stage etc.
• Seasonality component: A regular pattern of up and down fluctuations due to weather, customs, etc, and occurs within a single year.
• Cyclical component: Recurring up and down movements, affected by business cycles and economic factors, typically lasting multiple years.
• Random component: Random, uncertain fluctuations due to unknown or inexplicable reasons, with short duration and non-recurring patterns.

Naive Approach

• Assumes demand in the next period is the same as demand in the most recent period.

Moving Averages

• Moving average is a series of arithmetic means of demand in previous periods.
• Moving average is used when there is little or no trend, and used often for smoothing.

Weighted Moving Average

• Weighted moving average is used when some trend may be present, and where older data may be considered less important than more recent data.

Common Measures of Error

• The objective in forecasting is to obtain the most accurate forecast irrespective of technique; a method with the lowest forecast error is the best model.
• Measures of error include mean absolute deviation (MAD), mean squared error (MSE), and mean absolute percent error (MAPE)).

Calculating and Defining Measures of Error

• MAD: The average absolute value of deviations from forecast; ∑|X-forecast|/n
• MSE: The average squared value of deviations from forecast; ∑(X-forecast)²/n
• MAPE: The average absolute percent error of deviations from forecast; ∑{|X-forecast|/X}/n

TQM

• TQM stands for Total Quality Management, which is a management approach that highly values customer satisfaction.
• TQM's aim is for everyone to take personal responsibility for the quality of their work––the buck stops with the self––and organizational quality is not achieved by focusing on problems but on preventing problems entirely.

TQM Origin

• TQM became popular and implemented more widely in Japan by the mid-1970s, as opposed to the 1950s and 1960s when it was not as widely conceived as a management philosophy.

TQM: Deming Philosophy

• Deming philosophy emphasizes continuous improvement as a fundamental principle that should shape an organization's strategy.
• TQM aims for zero defects, which are viewed as both expensive and unnecessary.
• Organizations must emphasize improving systems instead of solely relying upon inspections.
• Organizations must move away from awarding business based on only price, but also on the quality of work.
• TQM requires training and emphasizes the need to make all organizational members strive toward an established TQ culture.

Total (All Stakeholders)

• Total commitment from all stakeholders (internal and external)
• Total commitment from the CMD and board.
• Total top management team members, executives, supervisors, workers, all suppliers, all functions, all processes and all activities are integral contributors toward TQM.

Managing Total Quality Culture

• Managing the total quality culture depends on facts and data-based results, inspirational leadership, rewards for recognition and setting inspirational targets, facilitation of training and development of new skills, and innovation.

Total Quality Management Dimensions

• Balancing and satisfying the needs of all stockholders.
• Quality involves continuous focus on customers.
• Management includes continuous improvements using data and fact-based decisions in a systematic way.

Total Quality Management

• Continuously maximizing customer satisfaction.
• Identifying and eliminating non-value-added activities.
• Leveraging human, material and other resources of the organization in an effective way to achieve objectives.
• Embedding a culture of continuous improvement in all areas with customer focus.

TQM Means

• Improvement involves improvements over improvement, which emphasizes continuous progress.

Continuous Improvement

• Customers, people, business (including non-financial and financial issues) and society results are all integral parts to continuous improvement and TQM.

Customer Satisfaction

• Customer satisfaction is key to success in winning orders.
• Customer satisfaction must be emphasized, and includes quality, cost, delivery and service after sales.

Current Scenario

• Increasing globalization, emergence of new partnerships, mergers and acquisitions, and rapid growth in IT and communication networks are some aspects of the current business scenario.
• Reducing the technological gap between developed and developing economies is necessary in today's global marketplace.

Current Scenario

• Focusing on customer satisfaction and retention, as well as on sustainability in product/service development and provision, are necessary in today's evolving marketplace.

Total Quality Culture

• TQM's aim is to get everyone to personally take responsibility for the quality of their work, ensuring that all members do not blame others in the event of quality issues, but rather on individual selves.
• If management insists on blaming others for problems, rather than fostering a culture of personal accountability toward TQM, it's not true TQM but rather something different.
• TQM aims to change attitudes of employees and to make it a priority to find and correct root causes of problems.

TQM....

• TQM is a belief in human progress that emphasizes training and development of attitudes toward quality in the workplace.

WORLD-CLASS

• World-class means the best among the best throughout the globe.

Inventory Management

• Inventory management involves planning and controlling inventories to meet an organization's competitive priorities.
• Inventory involves maintaining a stock of materials to satisfy customer demand or to support the production of services and goods.

Inventory Trade-offs

• Inventory levels depend on inputs from the supply chain (incoming materials flow), the level of inventory and the output (outgoing materials flow), including output flow of scrap.

Pressures for Small Inventories

• Inventory holding cost.
• Cost of capital.
• Storage and handling costs.
• Taxes.
• Insurance.
• Shrinkage (olescence and deterioration).

Pressures for Large Inventories

• Customer service.
• Ordering cost.
• Setup cost.
• Labor and equipment utilization.
• Transportation costs.
• Payments to suppliers.

Types of Inventory

• Accounting inventories include raw materials, work-in-process and finished goods.
• Operational inventories include cycle inventory, safety stock inventory, anticipation inventory and pipeline inventory.

Cycle Inventory

• Lot sizing principles are related directly to the elapsed time (or cycle) between orders.
• The longer the time between orders for a given item, the greater the cycle inventory.

Pipeline Inventory

• The average demand during lead time = lead time demand (D1).
• Number of periods in the item's lead time (L) = average demand per period (d)/lead time.

Example 9.1

• A plant makes monthly shipments of electric drills to a wholesaler.
• The wholesaler's average demand equals 70 drills/week.
• The lead time from the plant is three weeks.
• Currently, the average lot size of drills is 280 units. The question is whether inventory will decrease if the lot size is increased to 350 units, and the lead time reduced to two weeks.

Example 9.1 Calculation (Cycle and Pipeline Inventories and Cost )

• Calculations of the cycle and pipeline inventories and cost under the current lot size (280), and the alternative lot size (350), are illustrated.

Inventory Reduction Tactics

• Cycle inventory tactics include reducing lot sizes, and reducing ordering costs while permitting the lot size to increase, and increasing repeatability to eliminate the need for changeovers.
• Safety stock inventory tactics include placing orders closer to the time when they must be received, improving demand forecasts cutting lead times, and reducing supply uncertainties, as well as relying more on equipment and labor buffers.
• Anticipation/Seasonal inventory tactics involve matching demand with production cycles, adding products with different demand cycles, providing off-season promotional campaigns, and offering seasonal pricing plans.
• Pipeline inventory tactics include reducing lead times.

ABC Analysis

• ABC analysis classifies inventory into three groups according to their relative usage value;
• 1. Class A (highest priority) SKUs account for high dollar usage and are high in percentage of value and low in quantity.
• 2. Class B (medium priority) fall between class A and C.
• 3. Class C (lowest priority) SKUs account for low dollar usage and are low in percentage of value and high in quantity.

Solved Problem 2 (Calculation of ABC Usage Values)

• Calculating the annual dollar usage for the different SKUs (items) according to their quantity per year and unit value per SKU.

Economic Order Quantity (EOQ)

• EOQ is the lot size that minimizes the total annual inventory holding and ordering costs.
• Key assumptions in EOQ include a constant and known demand rate, no constraints regarding lot sizes, the only two relevant costs are inventory holding and ordering costs, independent decision-making concerning one item compared with other items, and a constant and known lead time.

Economic Order Quantity (EOQ) Modifications

• Modifications to EOQ include make-to-order strategy, order size restraints; quantity discounts, and replenishment that is not instantaneous.

Calculating EOQ

• Calculations concerning annual holding costs (dependent on average cycle inventory and unit holding cost for the year) and annual ordering/setup costs (dependent on the number of orders per year and their ordering or setup costs per order) lead toward the total annual cycle inventory cost being established and determining the best lot size.

Example 9.2 (Calculating EOQ)

• A museum of natural history opened a gift shop which operates 52 weeks per year for its top-selling SKUs.
• Calculate the annual cycle inventory cost for the current policy of using a 390-unit lot size.
• Determine if a lot size of 468 units would be better (lower total cost).

Example 9.3 (Calculation of EOQ and TBO)

• Using the EOQ and annual cost formula, determine annual inventory costs and how frequently placement of orders are made if EOQ values are employed.

Application 9.1 (Illustrative Case Study with Calculation)

• The goal is to determine the EOQ and the associated total annual costs.
• Determine how frequently orders would be made if EOQ is employed.

Managerial Insights from the EOQ

• Sensitivity analysis of the EOQ parameter (demand, order/setup and holding costs) has implications for managerial insights, and is related to the EOQ model parameters (demand, ordering/setup and holding costs).

Project Management

• A project is a series of temporary jobs directed toward achieving a unique product, service or output.
• Project management involves planning, directing and controlling resources (people, equipment, material etc.) toward meeting technical, cost and time constraints.

Project Management Implementation

• Initial steps to planning and managing a project include project appraisal and selection, defining project objectives, appointing a project manager, selecting project team members, and facilitating meetings to agree on project scope, timeframes and work breakdown structures.

Project Terminology

• Task: Subdivision of a project, usually a few weeks or months, and accomplished by a single group or organization.
• Work Package: A collection of activities combined logically based on established criteria.
• Work Breakdown Structure (WBS) Breakdown of project tasks into components.
• Project Milestone: Key moment in the execution of a project in which progress, task accomplishment and/or completion status of a project phase is recorded.

Work Breakdown Structure (WBS)

• A WBS breaks down the project into components and how the work will be accomplished;
• Consideration includes how work is to be done and how people will be organized, how resources are to be allocated, and how progress will be monitored. Example includes a diagram (missile) showing missile components such as guidance, rocket, launching platform and warhead components (stage 1 and stage 2).
• Various WBS orientations/approaches are illustrated––agency, function and hardware views, and the levels of detail––which are used in business contexts.

Project Representation

• Project representation illustrates the name, and description of the project, and a list of jobs which make up the project.

Broad Activity Chart

• A broad activity chart may be used to illustrate a project timeline illustrating when relevant milestones are reached.

Why Use Project Networks

• Project networks are useful for showing precedence for activities related to the entire project, for resource planning and allocation, project crashing (modifying timelines and associated costs), and communication, and for implementing the plan.

Project Representations

• Gantt charts or bar charts show the schedule of activities (which may have precedence dependencies),
• Activity-on-arrow (AOA) networks show a project network illustrating activities, dependencies and relation to the whole
• Activity-on-node (AON) networks depict activity relations, similar to AOA, and are oriented toward events.

Critical Path Method (CPM)

• CPM employs deterministic estimates and a single time estimate from an expert with relevant prior knowledge and experience when previous experience yields sufficiently accurate estimates of activity duration

Critical Path

• Critical Path method (CPM) is applied to determine the longest path in a network, establish lower bounds for project duration and determine selective control for managing the project.
• CPM can be calculated via enumeration of all paths in a network. Event-based and activity-based computations are used in AOA and AON network models respectively.

Example 1 (CPM Calculation)

• Example data provides job pre-decessors and associated durations (days).

Project Network Example (A-O-N)

A project network example is illustrated describing project activities, dependencies, and related events in diagrammatic format, and includes activities involved and their duration (days).

Forward Pass (A-O-N Networks)

• Forward pass (A-O-N networks) starts by initializing the start date at zero.
• Following that, calculating early start times (ES), and determining early finish times (EF) by adding the duration to early start times determines time for each task or activity within the project.
• In this calculation, early start times for each activity are determined by the maximum early finish time of all predecessor tasks or activities.

Backward Pass (A-O-N Networks)

• Backward pass(A-O-N networks) starts with the project duration (determined by using maximum early finish time for all ending jobs) and proceeds to determine last finish time (LF), last start time (LS) and the total float which is the difference between the last start time and the early start time for each task or activity.

Early & Late Schedule - Example

• Example illustrated includes job, durations (days), ES, EF, and LF for various activities related to a project.

Critical Path - Example

• The relevant activities in the project are shown, and their dependencies are graphically presented.

Gantt Chart Showing Activity Schedule

• A Gantt chart showing a project schedule for various project activities is presented. The example included involves various tasks and durations for each, showing a project plan

Test your knowledge on key concepts of project scheduling such as Late Start, Late Finish, and Critical Path. Dive into the specifics of Gantt Charts and understand Total Float in project management. This quiz will help you strengthen your understanding of scheduling techniques in project management.