Production and Operations

Management
Dr. Darshan Pandya
MBA (BA) | 2024-25 | SBM | NMIMS Mumbai
Introduction to Work Breakdown Structure
• Definition:
• A hierarchical decomposition of the total scope of work to be carried
out by the project team.

• Purpose:
• To organize and define the total scope of a project.

• Importance:
• Ensures clear project objectives, improves estimation accuracy, and
facilitates resource allocation.
 Types of WBS
• Deliverable-Based WBS:
• Organized around project deliverables or outcomes.

• Phase-Based WBS:
• Structured according to project phases or stages.

• Responsibility-based structure:
• Structured based on the organizational units that will work on the
project.
 Gantt Charts
• Definition:
• A visual representation of a project schedule, showing the start and
end dates of tasks.

• Purpose:
• To provide a clear overview of project timelines, task durations, and
dependencies.

• Utility:
• Widely used in project management for planning, coordinating, and
tracking project tasks.
 Key Features of Gantt Charts
• Task Bars:
• Horizontal bars representing the duration of tasks across a timeline.
• Milestones:
• Diamond-shaped markers indicating significant events or completion
points.
• Dependencies:
• Arrows or lines showing the relationship and sequence between
tasks.
• Progress Indicators:
• Portions of task bars shaded to depict the percentage of work
completed.
 Network Diagram
• Diagram of project activities that shows sequential relationships by use of
arrows and nodes

• Activity on arrow (AOA)

• Network diagram convention in which arrows designate activities

• Activity on node (AON)

• Network convention in which nodes designate activities
• Activities: Project steps that consume resources and/or time
• Events: The starting and finishing of activities
 PERT and CPM
• PERT (program evaluation and review technique) and CPM
(critical path method) are two techniques used to manage
large-scale projects

• By using PERT or CPM Managers can obtain:

1. A graphical display of project activities
2. An estimate of how long the project will take
3. An indication of which activities are most critical to timely project
completion
4. An indication of how long any activity can be delayed without delaying
the project
 Deterministic Time Estimates

• Deterministic (CPM)
• Time estimates that are fairly certain

• Probabilistic (PERT)
• Time estimates that allow for variation
a. Length of Each Path
b. Critical Path
The critical path is the longest path through the network, which
determines the minimum time required to complete the project.

Critical Path: 1 → 2 → 5 → 6 (20 weeks)

c. Expected Length of the Project

The project's expected length is the duration of the critical path,
which is 20 weeks.
d. Amount of Slack Time for Each Path
Slack time is the difference between the critical path duration and
the duration of a specific path.
 Early Start, Early Finish
• Finding ES and EF involves a forward pass through the network diagram

• Early start (ES)

• The earliest time an activity can start
• For nodes with one entering arrow, ES = EF of the entering arrow
• For activities leaving nodes with multiple entering arrows, ES = the largest of
the largest entering EF

• Early finish (EF)

• The earliest time an activity can finish
• EF = ES + t
 Late Start, Late Finish
• Finding LS and LF involves a backward pass through the network diagram

• Late Start (LS)

• The latest time the activity can start and not delay the project
• LS = LF - t

• Late Finish (LF)

• The latest time the activity can finish and not delay the project
• For nodes with one leaving arrow, LF for nodes entering that node equals the
LS of the leaving arrow
• For nodes with multiple leaving arrows, LF for arrows entering node equals
the smallest of the leaving arrows
 Using Slack Times
Knowledge of slack times provides managers with information for planning
allocation of scarce resources
• Control efforts will be directed toward those activities that might be most
susceptible to delaying the project
• Activity slack times are based on the assumption that all of the activities
on the same path will be started as early as possible and not exceed their
expected time
• If two activities are on the same path and have the same slack, this will
be the total slack available to both activities.
 Slack and the Critical Path
• Slack can be computed one of two ways:
• Slack = LS – ES
• Slack = LF – EF

• Critical path
• The critical path is indicated by the activities with zero slack
 Probabilistic Time Estimates
• The beta distribution is generally used to describe the inherent variability
in time estimates

The probabilistic approach involves three time estimates:

1. Optimistic time, (to): The length of time required under optimal

conditions
2. Pessimistic time, (tp): The length of time required under the worst
conditions
3. Most likely time, (tm): The most probable length of time required
The Beta Distribution
 Probabilistic Time Estimates
• The expected time, te ,for an activity is a weighted average of
the three time estimates:
to + 4t m + t p
te =
6
• The expected duration of a path is equal to the sum of the
expected times of the activities on that path:
Path mean =  of expected times of activities on the path
 Probabilistic Time Estimates (cont.)
• The standard deviation of each activity’s time is estimated as one-sixth of
the difference between the pessimistic and optimistic time estimates. The
variance is the square of the standard deviation:

 (t p − to )
2

 =
2

 6 
• Standard deviation of the expected time for the path

 path =  (Variances of activities on path )

What’s the probability
that your project will
finish within X days?
 Path Probabilities
• Calculating path probabilities involves the use of the normal
distribution
• Although path activities are represented by the beta
distribution, the path distribution can be represented by a
normal distribution
 Assumption: Independence
• Assumption that path duration times are independent of each
other
• Requires that
1. Activity times are independent
2. Each activity is on only one path
• The assumption of independence is usually considered to be met if
only a few activities in a large project are on multiple paths
Determining Path Probabilities

Specified time - Path mean

z=
Path standard deviation
 Time-Cost Trade-Offs
• Activity time estimates are made for some given level of
resources

• It may be possible to reduce the duration of a project by

injecting additional resources

• Motivations:
• To avoid late penalties
• Monetary incentives
• Free resources for use on other projects
 Time-Cost Trade-Offs: Crashing
Crashing

• Shortening activity durations

• Typically, involves the use of additional funds to support additional
personnel or more efficient equipment, and the relaxing of some work
specifications

• The project duration may be shortened by increasing direct

expenses, thereby realizing savings in indirect project costs
Crashing Activities
 2

A F
4 D 7
5
1
B 4
G 5
6 4
C E
2 2
3
Indirect Cost = ₹ 60 per day.
 2

A F
4 D 7
5
1
B 4
G 5
6 4
C E
2 2 Paths:
1. A-F = 4+7 = 11
3 2. A-D-G = 4+5+4 = 13
3. B-G = 6+4 = 10
4. C-E-G = 2+2+4 = 08

Normal Project Completion Time (CPM) = 13 days

Normal Project Completion Cost = Direct Cost + Indirect Cost
= ₹713 + (13 days x ₹60/day)
= ₹1493
 Crash Cost per day
∆𝑪𝒐𝒔𝒕 Maximum time available for
Activity
crashing ∆𝑻𝒊𝒎𝒆
∆𝑻𝒊𝒎𝒆
90 − 60
A = 30 4-3 = 1
4−3
250 − 150
B = 50 6-4 = 2
6−4
60 − 38
C = 22 2-1 = 1
2−1
250 − 150
D = 50 5-3 = 2
5−3
100 − 100
E = 𝑁𝐼𝐿 2-2 = 0
2−2
175 − 115
F = 30 7-5 = 2
7−5
240 − 100
G = 70 4-2 = 2
4−2
 Paths Costs (₹)
Iterations
A-F A-D-G B-G C-E-G DIRECT INDIRECT TOTAL

0 11 13 10 08 713 780 1493

1 11-1 13-1 713+30 12 x 60

10 08 1463
(A, 1 day) = 10 = 12 =743 = 720

2 12-1 743+50 11 x 60
10 10 08 1453
(D, 1 day) = 11 =793 = 660

3 11-1 793+50 10 x 60
10 10 08 1443
(D, 1 day) = 10 =843 = 600

4
 Paths Costs (₹)
Iterations
A-F A-D-G B-G C-E-G DIRECT INDIRECT TOTAL

0 11 13 10 08 713 780 1493

1 11-1 13-1 713+30 12 x 60

10 08 1463
(A, 1 day) = 10 = 12 =743 = 720

2 12-1 743+50 11 x 60
10 10 08 1453
(D, 1 day) = 11 =793 = 660

3 793+50 10 x 60
10 10 10 08 1443
(D, 1 day) =843 = 600

4
08-1
10-1 10-1 10-1 843+70+30 09 x 60
(G, 1 day) =07 1483
= 09 = 09 = 09 =943 = 540
(F, 1 day)