Ops Final SOS

BU385 Final Exam
Aid Session
TAUGHT BY EMILY SYCZ

What is SOS?
National organization with campus chapters run by

student volunteers
Run Exam-Aid sessions, which raise money to fund

sustainable education projects in Latin America
Visit www.lauriersos.com to get involved!
Thank you for supporting!
2
What is JDCC?
Annual undergraduate business competition

between 13 universities in Central Canada
Universities compete in:
Academic (8 teams), Debate, Sports, Social, Charity
Laurier has won School of the Year for the past 5
Years!
Your donation today goes towards fueling win #6, thank
you! (but the funds go to SOS of course)
3
Meet your tutor: Emily Sycz
Fourth Year Business/Math Double

Degree at UW
Co-ops at Mercer and Oliver Wyman
NYC (this January)
A headstand a day keeps the doctor
away
4
Agenda
1. Process Design and Facility Layout Chapter 6

2. Design of Work Systems Chapter 7
3. Learning Curves Supplement
4. Location Planning and Analysis Chapter 8
5. Project Management Chapter 17
* Tips and tricks throughout
5
PROCESS DESIGN AND FACILITY LAYOUT
CHAPTER 6
6
Process Planning
Process
Group of related tasks with specific inputs & outputs
Process design
tasks to be done & how they are coordinated among functions,
people, & organizations
Process strategy
an organizations overall approach for physically producing
goods and services
Process planning
converts designs into workable instructions for manufacture or
delivery
7
Process Strategy
Vertical integration
extent to which firm will produce inputs and control outputs of
each stage of production process
Capital intensity
mix of capital (i.e., equipment, automation) and labor
resources used in production process
Process flexibility
ease with which resources can be adjusted in response to
changes in demand, technology, products or services, and
resource availability
Customer involvement
role of customer in production process
8
Outsourcing
First step in process design is to consider whether to make or

buy some or all of a product or a segment of the production
process
Strategic decision based on the following factors:
Cost Speed
Capacity Reliability
Quality Expertise
9
Facility Layout
The specific configuration of physical facilities in an

organization
Affects material flow, equipment utilization, production
flexibility, etc.
Types:
Process
Product
Fixed Position
Hybrid
10
Goals
Eliminate bottlenecks
Facilitate communication
Increase capacity
Promote quality
Use space and labour efficiently
See your textbook for many more examples!
11
Process Selection
Projects/Job Shop
one-of-a-kind production of a product to customer order
Batch production
process many different jobs at the same time in groups or batches
Repetitive(Assembly line) production
produce large volumes of a standard product for a mass market
Continuous production
used for very-high volume commodity products
12
Job Shop
Characteristics:
Low quantity of high variety customized goods or services
Intermittent process (work shifts from one small job to the
next)
High flexibility of equipment and skilled workers
Example: Emergency Ward in a Hospital

Managerial challenge: schedule jobs so due dates are met
and the resources are utilized as much as possible
13
Batch Production
Characteristics:
Moderate volume/quantity and a variety of
goods/services
Process is still intermittent
Lower skill level of workers due to less variety
Example: movie theatres, small bakery

Managerial Challenge: meet planned production and
demand, utilize resources at high level
14
Repetitive Production
Characteristics:
Higher quantities of more standardized goods or services
Only slight flexibility of equipment and low skilled workers
Production and assembly lines (machine paced or worker paced)
Example: Ticket collectors at sport events, automatic car wash

Managerial challenge: balancing capacity, technology management,
quality and materials management
15
Continuous Process
Characteristics:
Very high volume of highly standardized outputs
Almost no variety in output, no need for machine flexibility
Low skilled workers
Product usually cannot be counted
Example: sugar, internet service

Managerial Challenges: same as assembly line, more care
needed for automated control of flow. Starting/stopping
production more challenging
16
Characteristic Table
Dimension Job Shop Batch Repetitive/ Continuous

Assembly
Product Customized Semi- Standardized Highly
Variety standardized standardized
Volume Low Low- High Very high
moderate
Equipment Very high Moderate Low Very low

flexibility
17
Product-Process Matrix
18
Product Process Matrix
Appliance repair
Inefficient
Emergency room
Bakery,
Theatre
Automobiles,
Carwash
Inefficient Steel Production

Water purification
19
Important Notes
Hybrid processes are very common these are

processes that have elements of other processes
embedded in them
Focused Factory = concept that processes that
product high quantity specialize in these products
Within each production process, many individual
operations are performed
20
Automation
Automation: using machinery equipment with

sensing and control devices that enable it to
operate automatically
Advantages
Low variability, speed
Disadvantages
Costly, less flexible, adverse affect on morale
Three kinds: Fixed, Programmable, Flexible
21
Fixed Automation
Most rigid
Concept comes from Ford in the 1900s
Uses high-cost, specialized equipment for a fixed sequence of
operations
Advantages: low unit cost and high volume
Limitations: minimal variety, high cost to change
Example: car manufacturers
22
Programmable Automation
Use of high-cost, general-purpose equipment

controlled by a computer program
Changing the process is as easy (or hard) as
changing the computer program
Numerically Controlled Machines (N/C)
Mathematical processing instructions
Computerized numerical control (own comp)
Direct numerical control (one computer controls many)
23
Programmable Continued
Numerically Controlled
Best used in cases where parts are processed frequently
in small batches, and mistakes are costly
There is a high costs and high level of skill
Robot
Mechanical arm,
power supply,
controller
24
Flexible Automation
Uses equipment that is more customized than

programmable
Requires less changeover time
Flexible manufacturing system
Group of machining centres that produce a variety of
similar products
Reduced costs and more consistent quality
Can only hand narrow range of part variety and has
longer planning and development times
25
Flexible Continued
Computer-Integrated Manufacturing (CIM)

Links a broad range of manufacturing and other activities
Integrates information from other areas in an
organization with manufacturing
Achieves rapid response to customer orders and/or
changes
Reduces indirect labour costs
26
Layout
Layout: the arrangement of departments, work

centers, equipment, etc.
want to have smooth movement (of work, people,
materials, info) through the system
27
Basic Layout Types
Product layout
arranges production resources linearly according to the
progressive steps
by which a product is made
Process layout
arranges production resources together according
to similarity of function
28
Product(Line) Layout
Assembly line
Standardized processing operations to achieve
smooth, rapid, high-volume flow
Standardized product/service, demand is stable,
divide work into series of tasks
Can arrange entire layout to correspond to
product requirements
29
Example
In
Out
30
Product
Advantages
Lower cost per unit
High degree of utilization
Minimal WIP inventory
Easier training/supervision
Simplified accounting
Disadvantages
Inflexible
Higher equipment cost
Dull, repetitive jobs
Stoppage at any point ties up whole operation
31
Process (Functional) Layout
For job shop and batch processes (variety)

Arranges production resources together
according to similarity of function
Less vulnerable to shutdown due to mechanical
failure, less interdependence, lower maintenance
costs
Routing and scheduling must be done on a
consistent basis, unit handling costs are high, lower
equipment utilization rates
32
Process Layout
33
Process (Functional) Layout
Advantages: Flexibility
Less vulnerable to shutdown
(from mechanical failure or absenteeism)
Lower maintenance costs
(and reduced investment in spare parts)
Disadvantages: Inefficiency
Scheduling can be difficult
(= low equipment utilization rates)
Setup, material handling, and
labour and costs can be high
Increased work-in-process inventory
34
Cellular Layout
Different machines arranged in a cell

Each cell processes items with similar requirements, called
part families
The machines handles all of the operations necessary
Usually U-shaped -> increased communication among
workers, more teamwork
Group technology: identifying items with similarities in

design or manufacturing characteristics, and grouping them
into families
35
Cellular Layout
Advantages:
Faster processing time
Increased capacity
Less material handling
Less WIP inventory
Reduced set-up times
Disadvantages:
Conversion to cellular is a massive undertaking
Methods: visual inspection, examination of design and
production data, production flow sequence and routing
analysis
36
Other Layout Types
Warehouse layouts
Important consideration: frequency of order
Retail layouts
Important consideration: traffic flow
Office layouts
Objective: optimize the physical transfer of information or
paperwork
New trend: create an image of openness (low rise partitions)
37
Fixed Position Layouts
Layout in which the product or project remains stationary,
and workers, materials, and equipment are moved as
needed.
Nature of the product dictates this type of

layout
Weight
Size
Bulk
Large construction projects
38
Designing Process Layouts
Line Balancing:
Assigning tasks to workstations in such a way that
the workstations have approximately equal time
requirements
7-39
How To?
1. Draw and label a precedence diagram

2. Calculate desired cycle time required for line
3. Calculate theoretical minimum number of
workstations
4. Group elements into workstations, recognizing
constraints, to minimize number of workstations
5. Calculate efficiency of line
40
Line Balancing Procedure
Draw and label a Calculate DESIRED Calculate theoretical

PRECEDENCE CYCLE TIME required MINIMUM NUMBER
DIAGRAM for line OF WORKSTATIONS
GROUP Elements into

Workstations
Calculate EFFICIENCY
Acceptable of Line Cycle Time and Precedence
CONSTRAINTS
efficiency?
Repeat if NO
41
Cycle Time
Cycle time is the maximum time

allowed at each workstation to
complete its set of tasks on a unit.
42
Line Balancing Formulas
OT OT
Output capacity CT
CT D
OT operating time per day D desired output rate
CT cycle time
t
N min
CT
N min Theoretical minimum number of work stations
t sum of the task times
43
Precedence Diagram
Tool used in line balancing to display elemental tasks
and sequence requirements
0.1 min. 1.0 min.

A Simple Precedence
a b Diagram
c d e
0.7 min. 0.5 min. 0.2 min.
44
Cycle Time/Workstations
CT = available work time/desired output

Nmin = theoretical number of workstations before
balancing
Min possible CT = max work element time
Nmin = sum of task times/CT
NA = actual number of work stations after balancing
CT = actual cycle time
45
Line Balancing Rules
Some Heuristic (intuitive) Rules:

Assign the task with longest time
Assign the task with the most followers
Idle time
Percentage of idle time 100
N actual Cycle time
Efficiency 100 - Percentage of idle time
46
Example
Demand = 100 tables per day. Each day has 420 minutes
Task Time (Mins) Description Predecessors

A 2 Measure wood -
B 1 Assemble legs A
C 3.25 Cut glass for top -
D 1.2 Assemble top to legs A, C
E 0.5 Sanding D
F 1 Staining E
G 1 Put pads on bottom B
H 1.4 Test F, G
47
Desired Cycle Time = 420/100
4.2 minutes per unit
Min Work Stations = sum of task times/CT

11.35/4.2 = 2.7
= 3 (always round up)
Assign based on number of successors, break

ties by longest operation time
48
Precedence Network
2 1 1
1.4
A B G
H
C D E F
3.25 1.2 .5 1
49
Example
A B G
H
CT = 4.2 min/unit
C D E F
Task Station Time Eligible Choose Revised Station Station
Time Remaining Tasks Task Time Idle
Remaining Time
A=2
B=1
C = 3.25
D = 1.2
E = 0.5
F=1
G=1
H = 1.4
50
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1
C = 3.25
D = 1.2
E = 0.5
F=1
G=1
H = 1.4
51
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25
D = 1.2
E = 0.5
F=1
G=1
H = 1.4
52
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2
E = 0.5
F=1
G=1
H = 1.4
53
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5
F=1
G=1
H = 1.4
54
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5 2 4.2 C C 0.95
F=1
G=1
H = 1.4
55
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5 2 4.2 C C 0.95
F=1 0.95 3.25 0.95
G=1
H = 1.4
56
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5 2 4.2 C C 0.95
F=1 0.95 3.25 0.95
G=1 3 4.2 D D 3 1.2
H = 1.4
57
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5 2 4.2 C C 0.95
F=1 0.95 3.25 0.95
G=1 3 4.2 D D 3 1.2
H = 1.4 3 E E 2.5 1.7
58
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5 2 4.2 C C 0.95
F=1 0.95 3.25 0.95
G=1 3 4.2 D D 3 1.2
H = 1.4 3 E E 2.5 1.7
2.5 F F 1.5 2.7
59
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5 2 4.2 C C 0.95
F=1 0.95 3.25 0.95
G=1 3 4.2 D D 3 1.2
H = 1.4 3 E E 2.5 1.7
2.5 F F 1.5 2.7
1.5 H H 0.1 4.1 0.1
60
Example
A B G
H
CT = 4.2 min/unit
C D E F
Remaining Time
A=2 1 4.2 A, C A 2.2
B=1 2.2 C,B B 1.2
C = 3.25 1.2 G G 0.2
D = 1.2 0.2 4.0 0.2
E = 0.5 2 4.2 C C 0.95
F=1 0.95 3.25 0.95
G=1 3 4.2 D D 3 1.2
H = 1.4 3 E E 2.5 1.7
2.5 F F 1.5 2.7
1.5 H H 0.1 4.1 0.1
11.35 1.25
61
Efficiency
NA = 3, CT = 4.2, Idle Times = 1.25
Percentage Idle Time = sum idle times

NA*CT
= 1.25/(3*4.2) = 9.9%
Efficiency = 1 Idle Time
= 1-.099
= 90.1%
62
Variable Task Times: Solutions
Leave some
Use buffer
idle time in
Reduce inventory Use parallel
workstations
variability between work stations
which have
work stations
random times
design the jobs

better
use higher
quality material,
do preventive
maintenance
63
Bottleneck Workstation
30/hr. 30/hr. 30/hr. 30/hr.

1 min. 1 min. 2 min. 1 min.
Bottleneck
30/hr. 2 min. 30/hr.
60/hr. 60/hr.
1 min. 1 min. 1 min.
30/hr.
2 min. 30/hr.
Parallel Workstations
64
Designing Process Layouts
Goal: minimize material handling costs
Option 1: Block Diagramming

minimize nonadjacent loads
use when quantitative data is available
Option 2: Relationship Diagramming
based on location preference between areas
use when quantitative data is not available
7-65
Example: Process Layout Design
Distance between locations (metres)
Location
From To A B C
A 20 40
B 20 30
C 40 30
Loads between departments (per day)

Department
From To 1 2 3
1 10 80
2 20 30
3 90 70
66
Block Diagramming
Unit load STEPS

quantity in which material create load summary chart
is normally moved calculate composite (two way)
movements
Nonadjacent load
develop trial layouts minimizing
distance farther than the number of nonadjacent loads
next block
COPYRIGHT 2009 JOHN WILEY & SONS,

INC. 7-67
Example
Five departments are to be assigned to location B-F

in the grid below. Department 6 must be assigned
to location A. Transportation cost is $2 per metre
and objective is to minimize total transportation
cost.
A
B C
Dept. 6
D E F
68
Example
Distance between Centres of Locations (metres)
From/To A B C D E F
A - 50 100 50 80 130
B - 50 90 40 70
C - 140 60 50
D - 50 120
E - 50
F -
Example
Pair of Dept Workflow
From-To Departmental Workflows (# trips per day) 1-2 (90+35)=125
1-4 (23+41)= 64
Fro
1 2 3 4 5 6 1-3 62
m/To
2-6 54
1 - 90 25 23 11 18 1-6 50
2-5 26
2 35 - 8 5 10 16
1-5 25
3 37 2 - 1 0 7 3-6 20
2-4 17
4 41 12 1 - 4 0 4-5 13
2-3 10
5 14 16 0 9 - 3
5-6 5
6 31 38 13 2 2 - 3-4 2
4-6 2
3-5 0
70
So what do we do?
We can now see that department 1 and 2 have the

greatest interdepartmental workflow, so they should be
the closest.
Maybe B and E (smallest distance). But notice workflow
between 2 and 6 is bigger than 1 and 6 we put 2 in B
and 1 in E.
Move onto next highest workflow. And so on.
4 goes in F, doesnt need to be close to 6.
A B C
3 goes in D. Dept. 6 Dept. 2 Dept. 5
D E F
That leaves 5 in C. Dept. 3 Dept. 1 Dept. 4
71
This all means? Total Cost!
Pair of Dept. b. Distance c. Workflow (b*c*$2) Cost
1-2 (B-E) 40 125 $10 000
1-3 (D-E) 50 62 6 200
1-4 (F-E) 50 64 6 400
1-5 (E-C) 60 25 3 000
1-6 (A-E) 80 50 8 000
2-3 (B-D) 90 10 1 800
2-4 (B-F) 70 17 2 380
2-5 (B-C) 50 26 2 600
2-6 (A-B) 50 54 5 400
3-4 (F-D) 120 2 480
3-5 (D-C) 140 0 0
3-6 (A-D) 50 20 2 000
4-5 (C-F) 50 13 1 300
4-6 (A-F) 130 2 520
5-6 (A-C) 100 5 1000
72
Closeness Ratings - Muther
Other model is too restrictive as it only minimizes

based on one aspect
Muther suggests six reasons for closeness
1. Use of same equipment or facilities
2. Share the same personnel
3. Sequence of work flow
4. Ease of communication
5. Unsafe or unpleasant conditions
6. Similar work performed
73
Muther Grid
74
Service Layouts
Must be attractive and functional
Free flow
Encourage browsing, impulse, flexibility
Grid
Customer familiarity, low cost, easy to clean
Loop and Spine
Increase customer sightlines and expose, encourages
circulation
75
Pretty Pictures
76
Design of Work Systems
CHAPTER 7
77
Job Design
Job design involves specifying the content (what)

and methods (how) of job
78
Introduction to Job Design
Efficiency Approach
Includes specialization, methods analysis, and time standards
Rational for specialization: concentrate ones efforts and thus
become proficient at that type of work
Assembly line jobs can be monotonous and boring
Behavioural Approach
To make jobs more interesting:
1. Job enlargement
2. Job rotation
3. Job enrichment
4. Self-directed teams
79
Specialization: Advantages
For Company: For Worker:

1. Simplifies training 1. Low education and
skill requirements
2. High productivity
2. Minimum
3. Low wage costs
responsibilities
3. Little mental effort
needed
80
Specialization: Disadvantages
For Company: For Workers:

1. Difficult to motivate 1. Monotonous work
quality 2. Limited opportunities
2. Worker dissatisfaction, for advancement
possibly resulting in 3. Little control over work
absenteeism, high
4. Little opportunity for
turnover, disruptive
self-fulfillment
tactics
81
Methods Analysis
Methods analysis
breaks down the job into sequence of tasks and elements and
improves it.
Basic procedure:
1. Identify the job to be studied and gather information
2. Discuss the job with the operator and supervisor
3. Study and document the present method
4. Question the present method and propose a new one

82
Process Charts
Chart used to examine the overall sequence of an
operation by focusing on movements of the operator
or flow of materials
Ask:
Why is there a delay or shortage at this point?
How can travel distances be shortened/avoided?
Can an operation be eliminated?
Can the sequence be changes?
Can similar activities be grouped?
Would additional or better equipment help?
83
Worker-Machine Chart
Helps to see portions of work cycle
during which an operator and equipment
are busy or idle.
Can help to determine

how many machines
one operator can manage.
84
Motion Study
Motion study is the systematic study of the human motions

used to perform an operation.
Purpose:
Eliminate unnecessary motions
Identify best sequence of motions
85
Motion Study: techniques / tools
Motion economy principles:

Guidelines for designing motion - efficient work procedures
Three categories:
1. Use of arms and body
2. Arrangement of the workplace
3. Design of tools/equipment
Analysis of elementary motions (elements):

basic motions into which a job can be broken down
i.e. reach, grasp, move, disengage.
86
Working Conditions: Government Regulation
Canadian Labour Code

safety and other work standards (e.g. min wage)
workers have rights to:
a) refuse dangerous work,
b) participate in improving health & safety,
c) know about hazards in the workplace.
Canadian Centre for Occupational Health and Safety
Workplace Hazardous Materials Information System

(WHMIS),
mandates proper labeling of hazardous material
making available material safety data sheets.
87
Working Conditions
o Temperature and Humidity

o Ventilation
o Illuminations
o Noise and Vibrations
o Work Breaks
o Safety
88
Safety: Protection Against Hazards
clearly marked protective

proper lighting
danger zones equipment
emergency
safety devices housekeeping
equipment
thorough enforcement
training of procedures
89
Safety
Requires constant attention
Occupational Safety and Health Standards
WHMIS training required
Two main causes of accidents:

carelessness
hazards
90
Ergonomics
Involves fitting the job to the workers capability

and size.
Design of equipment, work methods, work space
Remove awkward movement
Try to prevent common workplace injuries (e.g. back

injuries, repetitive motion injuries)
91
Work Measurement
Determine how long it should take

to do a job.
Stopwatch time study
Predetermined element times
Work sampling
92
Standard Time
The amount of time it should take a qualified worker to
complete a specific task
working at a sustainable rate,
using given methods, tools and equipment, raw materials, and

workplace arrangement.
93
Stopwatch Time Study
Development of a time standard based on

observations of one worker taken over a number of
cycles.
The basic steps in a time study:

1. Define the task to be studied
2. Determine the number of cycles to observe
3. Time the job
4. Compute the standard time
94
Number of cycles
Number of cycles depends on:

1. variability of observed times,
2. desired accuracy, and
3. desired level of confidence for the estimated job time
2 2
zs zs
n or n
ax e
z =Number of Normal standard deviations needed for desired confidence
s =Sample standard deviation
a =Desired accuracy proportion (= percentage/100)
=Sample mean
e =Accuracy amount or maximum acceptable error amount
n =xnumber of observations (= sample size)
95
Example
Determine number of observations needed to achieve a specified maximum error,
with a confidence of 95.5 percent. mean = 5.2 minutes, standard deviation = 1.1
minutes
a. A maximum error of +/- 6% of the sample mean.
b. A maximum error of .40 minute.
x-bar = 5.2 minutes z = 2.00 for 95.5% s = 1.1 minutes

a = .06 e = .40
Solution
2 2
zs 2.00(1.1)
n 49.72 (round up to 50 observations)
ax .06(5.2)
2 2
zs 2.00(1.1)
n 30.25 (round up to 31 observations)
e .40
96
Normal Time
Normal time (NT) = Observed time x
Performance rating
Observed Time is an average of recorded times
The Performance Rating expressed as a decimal.

Performance Rating of a person working 10% faster than
normal = 1.10 or 110% of normal time. Working 10% slower
= 0.90 or 90% of normal.
Performance rating is subjectively assigned
97
Standard Time
Standard time = Normal time x Allowance Factor
Standard time = NT x (1 + Allowance % )

based on job time
used when different tasks have different allowances
Standard time = NT .
1 Allowance %
based on time in workday
used when different tasks have similar allowances
98
Time Study Example
You want to determine the standard time for a job.
A worker produced 20 items in an 8 hour day. As the
worker was nervous under observation, it was
estimated that the employee worked about 10%
faster than normal. Allowances for the job are 25%
of the normal time.
What are the normal and standard times for this job?
99
Time Study Example Solution
Normal time = Observed Time x (Performance rating)
= (480 minutes/20) x (1.10)
= 26.4 minutes
Standard time = NT .
1 Allowance
= (26.4)/(1-0.25)
= 35.2 minutes
100
Cautions on Time Studies
Analyst must be familiar with task

Workers may attempt to lengthen times
Abnormally short times should be discarded
Abnormally long times should be investigated
Jobs need to be broken down into basic motions

Many jobs cant be observed like this
Costly and disruptive: benefits must outweigh cost

Can also use historical or published elemental times to determine
times for a task
Need high skill to describe task in basic elements
101
Predetermined Element Times
Published data based on extensive research on

element times
Methods Time Measurement (MTM) tables
Time Measurement Unit (TMU) : 0.036 seconds
Many tables for a variety of moves and conditions

distance, difficulty, weight, degree of turn, etc.
Requires much time and skill
102
Work Sampling
technique for estimating the proportion of time that a
worker or machine spends on each activity or is idle.
make brief observations of a worker or

machine at random intervals
does not require
- timing an activity
- continuous observation
103
Work Sampling
2. Notify
1. Identify worker and 3. Compute
worker to be supervisors to initial estimate
studied avoid arousing of sample size
suspicions
6. Determine 5. Begin taking

4. Develop a
estimated observations.
random
proportion of Re-compute
observation
time spent on required sample
schedule
specified activity size periodically
104
Work Sampling: determining sample
size
z =Number of Normal standard deviations needed for desired confidence
a =Desired accuracy proportion (= percentage/100)
p = sample proportion (estimate)
n = number of observations = sample size
105
Compensation
Time-based pay
Compensation based on time an employee has worked
during a pay period
Output-based (piece rate) pay

Compensation based on the amount of output an
employee produces during a pay period
106
Compensation
Group Incentive Plans

Sharing of productivity gains with employees
Output and cost reduction (gain-sharing)
Increases in profit (profit-sharing)
Skill/Knowledge-Based Bonus Plans

reward workers who undergo training
to increase their skills/knowledge
107
Output-based (piece rate) pay
Compensation system should be:

Accurate
Easy to apply
Consistent
Easy to understand
Fair
108
LEARNING CURVES
SUPPLEMENT
109
Underlying Principles
1. Each time you perform a task it takes less time

than the last time you performed the task
2. The extent of task time decreases over time
3. The reduction in time will follow a predictable

pattern
110
The Learning Effect
Why does this happen?

Actual worker learning
Pre-production factors (product design)
Changes after production has begun (layout)
Management input (scheduling)
111
Learning with Improvements
112
Determining Unit Times
b
Tn = T1 n
where:
Tn = Time for the n-th unit
T1 = Time for the first unit
learning%
b = ln ln 2
100
113
Example
A contractor is negotiating a contract for the

building of 24 houses. The initial house required
475 days of direct labour. The learning percentage is
75%. How much time will the 24th house take to
produce?
114
Solution
We know that we are looking for T24
= T 1 x nb
= 475 x 24(ln.75/ln2)
= 127.01 days
115
Table (Factor) Approach
Table gives:
unit value time factor
for # of units produced
in the sequence (unit
number)
total (cumulative) time
factor
for n units
116
Same Example
A contractor is negotiating a contract for the building of 24

houses. The initial house required 475 days of direct labour.
The learning percentage is 75%. How much time will the 24th
house take to produce?
Tn = T1 unit time factor

Tn = T1 total time factor
117
Solution
75% learning curve, T1 = 475 days, Unit 24

From the table
118
119
75% learning curve, Unit = 24
From table: Unit Time = .267
Total Time = 9.928
a) Expected Time for 24th house = 475(.267)

= 126.825
b) Expected total time for all 24 houses
= 475(9.928) = 4715.8
c) Average time = 4715.8/24 = 196.49
120
Calculating Learning Rate
UNIT TIME UNIT TIME
1 11 6 4.2
2 10.6 7 3.1
3 9 8 2
4 7.3 9 1.5
5 5 10 .3
Use 1 2, 2 4, 3 6, 4 8, 5 10, sum and divide by 5
Unit 2/Unit 1 = 10.6/11 = .964 Sum = .964+.689+.467+.274+.06

Unit 4/Unit 2 = 7.3/10.6 = .689 = 2.454
Unit 6/Unit 3 = 4.2/9 = .467 Divided by 5 = .4908
Unit 8/Unit 4 = 2/7.3 = .274
Unit 10/Unit 5 = .3/5 = .06 That means a 49.08% learning curve
121
Estimating the Rate
A baker has made 8 loaves of bread so far. We can see that

the time to make the second loaf was lower than the first.
Each subsequent loaf takes less time as seen below.
Determine the learning rate by regression so you can
estimate time for subsequent loaves. Loaf No Time (min)
Determine t1, the mean time for 1 20
the 1st loaf, and the Learning
2 15
Rate r . Estimate the mean time
for the 40th, 60th and 80th cake 3 15
4 13
5 12
6 11
7 10
8 10
122
Average of Calculated Values
Cake No Time (min) Rate
1 20
2 15 =15/20 = .750
3 15
4 13 = 13/15 = .867
5 12
6 11
7 10
8 10 = 10/13 = .769
Average .795
Estimated Learning Rate of 79.5%
123
We know that T1 = 20 and r = .795
T40 = 20 x 40(ln.795/ln2) = 5.899
T60 = 20 x 60(ln.795/ln2) = 5.516
T80 = 20 x 80(ln.795/ln2) = 4.6898
124
If we were to estimate learning rate
using a given b value
Fitting a power function to the data
LEARNING RATE = 100 x ebln2
learning%
ln ln 2
Remember that b = 100
So that formula is just the b formula rearranged.
125
Determine the minimum number of
repetitions to achieve a given standard
Use the factor table to find the number of units

that most closely matches a unit time of Tn/T1
Or, use this formula
[ln(Tn ) ln(T1 )]/b

n=e
126
Cautions
Learning % may differ between organizations

Projections are only approximations
If your estimates are based on the time for first
unit, need to ensure there is considerable care to
ensure the validity of the first time
Learning curves do not apply to mass production
Users sometimes fail to include carryover effects
(previous or similar experiences)
127
LOCATION PLANNING AND ANALYSIS
CHAPTER 8
128
Nature of Location Decisions
Decisions made infrequently in response to:

Growth marketing strategy
Shifts in the market or in business costs
Depletion of resources
Important design decision

Long term commitment/costs
Large impact on capital and operating costs
Poor choice detrimental to operations
129
Supply Chain
Location factors can depend on where a business is in the
supply chain
Supplier
Near source of raw materials
Middle
Close to supplier or customer
Retail
Accessibility
Demographics
Traffic patterns
130
Formal Decision Process
1. Identify the important factors

2. Gather information on appropriate sites
3. Short list
4. Site visits and meetings
5. Evaluate and make selection
131
Regional Factors
Location of raw materials

Perishability/transportation
Location of markets
Competition/convenience
Labour factors
Skills/costs/unions
Other costs
Taxes/land and building costs
132
Foreign Locations
We worry about
Political stability
Attitude toward foreign companies
Language and cultural differences
Exchange rates and currency risks
133
Community Considerations
Availability of skilled workers

Liveability
Facilities and service available
Attitudes
Taxes and incentives
Environment regulations
Economics
Land and building costs
Transportation infrastructure
134
Site Related Factors
Site size and room for expansion

Utility and sewer capacity
Parking and road access
Zoning restrictions
135
Why Canada?
Shortened delivery time/reduced costs

Access to natural resources
Skilled labour, educated workers
Politically very stable, tax incentives
Safe and secure
Good telecommunication infrastructure
Low cost of energy, health care
Lower wage and exchange rates
136
How do we evaluate?
1. Locational Break-Even
2. Factor rating
3. Centre of Gravity
4. Transportation
137
1. Break-Even
First: Determine fixed and variable costs

Next: Plot total cost lines
Last: Determine lowest total costs
Note: assuming that fixed and variable costs are

constant for the range of probable output AND only
one product is involved
138
For Example
Below are costs of 4 locations: A, B, C, D

Location Fixed Costs ($) Variable Costs ($)
A 250,000 11
B 100,000 30
C 150,000 20
D 200,000 35
Determine over what range each alternative is

superior
If expected output is 10000 is the best, who wins?
139
Fixed Variable Total
Costs Costs Costs
A $250,000 $11(10,000) $360,000

Solution
B 100,000 30(10,000) 400,000
C 150,000 20(10,000) 350,000
C Wins
D 200,000 35(10,000) 550,000
140
2. Factor-Rating Method
1. Develop a list of relevant factors

2. Assign as weight to each factor
3. Develop a scale for each factor
4. Score all factors for each location
5. Multiply score by weight for each factor and
sum for each location
6. Choose the location with the highest composite
score!
141
Example
Laurier is looking to build a new residence on either

King or Albert. Factor weights are given below for
operating cost, building cost, size, distance, and
parking. Scores (out of 10) are also given. Where
should the residence be built?
Factor Weight King Score Albert Score
Operating Cost 20 7 6
Building Cost 7 5 8
Size 14 8 9
Distance 35 6 7.5
Parking 24 7.5 8.5

142
Solution
Factor Weight King Score Albert Weighted Weighted
Score Score King Score Albert
Operating 20 7 6 (20)(7) = (20)(6) =
Cost 140 120
Building 7 5 8 (7)(5) = (7)(8) =
Cost 35 56
Size 14 8 9 (14)(8) = (14)(9) =
112 126
Distance 35 6 7.5 (35)(6) = (35)(7.5) =
210 262.5
Parking 24 7.5 8.5 (24)(7.5) = (24)(8.5) =
180 204
Total 100 677 768.5
143
3. Center of Gravity
Find location of distribution center that minimizes

total distribution costs
Looks at: locations of markets, volume of goods
shipped, and shipping cost or distance
144
Center of Gravity Steps
1. Overlay a coordinate system on a map showing

existing locations
2. Location (0,0) arbitrary
3. Map drawn to scale
4. Determine coordinates of each destination
5. Calculate X and Y coordinates for center of
gravity
Weighted by quantity transported
145
Centre of Gravity
xiQi
x - bar =
Qi
yiQi
y - bar =
Qi
where xi = x coordinate of destination i

yi = y coordinate of destination i
Qi = Quantity to be transported
to destination i
146
For Example
Destination (x, y) Daily Quantity
A (5, 8) 15
B (6, 9) 20
C (3, 9) 25
D (9, 4) 30
(5)(15) + (6)(20) + (3)(25) + (9)(30)

X-bar = 15 + 20 + 25 + 30
=6
(8)(15) + (9)(20) + (9)(25) + (4)(30)

Y-bar = 15 + 20 + 25 + 30
= 7.167
Note: if quantities are equal, assign a weight of 1 to each location 147

4. Transportation Model
Used to determine shipments while looking to

minimize overall transportation cost
It considers:
Demand constraints
Capacity constraints
For multi-facility conditions
It is a special purpose algorithm of linear
programming
148
Location Analysis Software
Geographic Information Systems (GIS)

Computer-based tool that combines data from different
databases and is used for collecting, storing, retrieving,
and displaying location-dependent demographic data on
a map
Intuitive and graphical
Modelling/Optimization Software
It is a many use linear programming
Something like MicroAnalytics OptiSite
149
PROJECT MANAGEMENT
CHAPTER 17
150
Projects
Unique, one-time operations that perform a

specific set of objectives in a limited time frame
Examples:
Building construction, research, event
Want to complete the project within:

time/schedule, cost/budget, and
performance/quality guidelines
151
Project Phases
1. Project Initiation
Conception, feasibility study, selection
2. Planning and Scheduling
Activity breakdown, determine resources/costs/risks,
schedule/subcontract
3. Execution and Control
Purchase, monitor, adjust
4. Closeout
Ensure completion, paperwork, review
152
Project Selection Steps
1. Establish a council (exec committee)

2. Identify project categories and criteria
3. Collect projects data
4. Assess resource availability
5. Prioritize the project within categories
6. Select projects to be funded
7. Communicate results to stakeholders
153
Projects
Project Manager is responsible for:

Work, HR, communication, quality, time, costs
Ethical Issues
Temptation to understate costs, withhold information,
misleading status reports, falsifying records,
compromising workers safety, approving substandard
work
154
Project Planning
Project Planning
Putting the project into work activities, figuring out
needed resources, scheduling, etc.
Quality Planning
How is quality going to be assured and controlled
Communications Planning
What information do shareholders need
Purchase Planning
What to purchase, specifications, from who?
155
Risk Management Planning
Risk: if something were to happen that had an

undesirable consequence
Delays, increased costs, cant meet specifications, project
termination
Risk Management
1.Identify potential risks
2.Analyze and assess risks
3.Work to minimize occurrence of risks
4.Establish contingency plans
156
Risk Response
Backup systems
Use a more stable supplier
Reducing project scope
Risk-sharing
Extending the schedule
Creating contingency funds
157
Project Management Tools
Work Breakdown Structure (WBS)

Gantt Chart
CPM/PERT
Software (Microsoft Project)
158
1. Work Breakdown Structure (WBS)
Hierarchical listing of what has to be done during a

project
Establishes a framework that identifies the required
activities
1. Identify major components

2. Identify major subcomponents
3. Breakdown subcomponents into work packages
4. Breakdown work packages into activities
159
WBS
160
Project Scheduling
1. List activities: defined in WBS

2. Sequence: identify the order
3. Resources: needed for each activity
4. Duration: how long will each one take
5. Schedule: using CPM/PERT
6. Modify: as needed (level, compress, etc.)
161
2. Gantt Chart
162
3. PERT and CPM
PERT (program evaluation and review techniques)

CPM (critical path method)
Techniques used to schedule and control large
projects
From these, managers get:
1. A graphical display of activities and relationships
2. Estimate of how long a project will take
3. Indication of which activities are most crucial for
completion
4. Indication of how long an activity can be delayed
163
Precedence Network Diagram
An ordered diagram of the activities

Activity on arrow (AOA)
Arrows designate activities
Activity on node (AON)

Nodes designate activities
Path
Any sequence that leads from start
to end
164
Critical path
Longest from start to end
Determines expected project duration
0 slack time
Critical Activities
Any activities on the critical path
Path Slack Time

Length of a critical path length of a different path
165
Example
166
Solution
Path Length (weeks) Path Slack (weeks)

S-1-2-6-7 8 + 6 + 3 + 1 = 18 20 18 = 2
S-1-5-78 + 11 + 1 + 20 20-20 = 0
S-3-4-7 4 + 9 + 1 = 14 20-14 = 6
167
Activity Durations
Deterministic
Time estimates that are fairly certain
Probabilistic
Time estimates that allow for variation
PERT, will be shown later on
Time-Cost Models
Used for cost trade offs in crashing (after PERT)
168
Solution Techniques
Network Activities!
ES: earliest start time
EF: earliest finish time
LS: latest start time
LF: latest finish time
This gives us:

Expected project duration
Activity slack times
Critical path
169
170
ES and EF
Start at the left side of the precedence network (the

start node) and work toward the right side.
For the start activity: ES = 0.
If an activity has a unique immediately preceding

activity:
ES = EF of the immediately preceding activity.
If an activity has multiple immediately preceding
activities:
ES = largest EF of immediate predecessors.
For each activity:

EF= ES + Activity duration
171
LS and LF
Start at the right side of the precedence network (the end
node) and work toward the left side.
For the end activity: LF = EF
If an activity has a unique immediate follower:
LF = LS of the immediately follower
If an activity has multiple immediate followers :
LF = smallest LS of immediate followers.
For each activity:
LS = LF - Activity duration
172
Slack
Can be computed two ways

LS-ES
OR
LF-EF
Critical Path
Activities with zero slack
Can try to find the critical path first (by drawing it out), it
can establish a check point when going through the
chartwhich will appear in a few slides
173
How can we use slack?
Helps to plan allocations of scarce resources

Direct efforts at activities that have little or no slack and
may delay project
Assuming that activities start as early as possible and will
not exceed expected time
Slack is SHARED
If two activities on the same path have the same slack,
this is total slack available to both
174
How about we do some examples.ok!
175
Problemo
You are given this, find the ES, EF, LS, LF, critical
path, and slack times for all activities
Activity Time Predecessors

A 4 -
B 5 -
C 7 -
D 6 B,C
E 4 C
F 8 A,D
G 12 E
176
Step 1: Draw it out
A F
4 8
B D
Start End
5 6
G
12
C E
7 4
177
Calculate ES, EF, LS, LF
Activity Time Pred ES EF LS LF Slack
A 4 -
B 5 -
C 7 -
D 6 B,C
E 4 C
F 8 A,D
G 12 E
ES = MAX of EF of Predecessors
EF = ES + Activity time
LF = MIN LS of Successors
LS = LF Activity time
Activity Slack = LS-ES OR LF-EF
Critical Activity if LS-ES = 0 of LF-EF =0; (if Activity Slack = 0)
178
A 4 - 0
B 5 - 0
C 7 - 0
D 6 B,C 7
E 4 C 7
F 8 A,D 13
G 12 E 11
179
A 4 - 0 4
B 5 - 0 5
C 7 - 0 7
D 6 B,C 7 13
E 4 C 7 11
F 8 A,D 13 21
G 12 E 11 23
180
A 4 - 0 4
B 5 - 0 5
C 7 - 0 7
D 6 B,C 7 13
E 4 C 7 11
F 8 A,D 13 21 15 23
G 12 E 11 23 11 23
181
A 4 - 0 4 11 15
B 5 - 0 5
C 7 - 0 7
D 6 B,C 7 13 9 15
E 4 C 7 11 7 11
F 8 A,D 13 21 15 23
G 12 E 11 23 11 23
182
A 4 - 0 4 11 15
B 5 - 0 5 4 9
C 7 - 0 7 0 7
D 6 B,C 7 13 9 15
E 4 C 7 11 7 11
F 8 A,D 13 21 15 23
G 12 E 11 23 11 23
183
A 4 - 0 4 11 15 11
B 5 - 0 5 4 9 4
C 7 - 0 7 0 7 0
D 6 B,C 7 13 9 15 2
E 4 C 7 11 7 11 0
F 8 A,D 13 21 15 23 2
G 12 E 11 23 11 23 0
184
PERT
Deals with probabilistic time estimates in a beta

distribution
Optimistic Time (to)
Pessimistic Time (tp)
Most Likely Time (tm)
185
Probabilistic Time Estimates
Optimistic Most likely Pessimistic
time time time
186
What a Beta Distribution Looks Like
P(time)
P(time)
to tm te tp to te tm tp
Time Time
P(time)
to tm = te tp
Time
187
Why do we Beta?
Beta distribution mean and variance can be

approximated with three time estimates (like
maybe pessimistic, most likely, and optimistic)
Beta distribution is continuous with no pre-

determined shape
It will therefore be skewed by the time estimates

given good for unique projects
188
Formulas
Expected time: te
to 4t m t p
te
6
Path Mean (expected duration)

Path mean of expected times of activities on the path
189
MORE!
Standard Deviation for each activity

2 2
2
t p to t p to
OR 2
6 36
Note: Remember that these are actually variancesso take the square root
Standard deviation of expected time for the path
path Variances of activities on path
190
Example Time
Given the table below, find the expected time,

activity variance, path length, path slack and
variance of the critical path.
Activity Pred T0 Tm Tp
A - 2 3 10
B - 2 5 8
C - 1 4 10
D A 3 3 15
E B 4 8 18
F D,E 3 5 10
G C,E 3 6 18
191
START: Draw it OUT!
2 3 10 3 3 15 3 5 10
A D F
258 4 8 18
Start End
B E
1 4 10 3 6 18
C G
192
Table
Time Expected Activity
Estimates time Variance
Activity Pred to tm tp te 2
A ST 2 3 10
B ST 2 5 8
C ST 1 4 10
D A 3 3 15 Te(A) = 2+3(4)+10 = 4
E B 4 8 18
6
F D,E 3 5 10 Variance(A) = [(10-2)/6]2

= 1.778
G C,E 3 6 18
to 4m tp 2 tp to 2
Expected Activity Time te Activity Variance ( )
6 6
193
Table
A ST 2 3 10 4 1.778
B ST 2 5 8 5 1
C ST 1 4 10 4.5 2.5
D A 3 3 15 5 4
E B 4 8 18 9 5.44
F D,E 3 5 10 5.5 1.361
G C,E 3 6 18 7.5 6.25
to 4m tp 2 tp to 2
6 6
194
Table
A ST 2 3 10 4 1.778
B ST 2 5 8 5 1
C ST 1 4 10 4.5 2.5
D A 3 3 15 5 4
E B 4 8 18 9 5.44
F D,E 3 5 10 5.5 1.361
G C,E 3 6 18 7.5 6.25
to 4m tp 2 tp to 2
6 6
195
Paths
Path Path Path Slack Critical
Length
A-D-F-END
B-E-F-END
B-E-G-END
C-G-END
196
Paths
Length
A-D-F-END 4+5+5.5
= 14.5
B-E-F-END 5+9+5.5
= 19.5
B-E-G-END 5+9+7.5= YES

21.5
C-G-END 4.5+5.5
= 10
197
Paths
Length
A-D-F-END 4+5+5.5 21.5-14.5 = 7
= 14.5
B-E-F-END 5+9+5.5 21.5-19.5 = 2

= 19.5
B-E-G-END 5+9+7.5= 21.5-21.5 = 0 YES

21.5
C-G-END 4.5+5.5 21.5 10 = 11.5

= 10
Project Completion = Length of Longest Path = tp =
21.5
198
Paths
Length
A-D-F-END 4+5+5.5 21.5-14.5 = 7
= 14.5
B-E-F-END 5+9+5.5 21.5-19.5 = 2

= 19.5
B-E-G-END 5+9+7.5= 21.5-21.5 = 0 YES

21.5
C-G-END 4.5+5.5 21.5 10 = 11.5

= 10
Project Completion = Length of Longest Path = tp =
21.5
Variance on Critical Path
= Sum of Variances of B, E, and G
= 1+5.44+6.25 = 12.69
199
Path Statistics
Use path mean and standard deviations to

compute:
Probability project will be completed by a certain time
Probability that the project will actually take longer than
its expected completion time
Assumes independence of path durations

Activity durations must be independent
Each activity must be on only one path
200
Path Probabilities
Z-scores
Specified length of time - Path mean duration
z
Path standard deviation of duration
201
Looks familiar?
Determine probability that project is
completed within specified time
x-
Z=
where
= te = project mean time
= project standard deviation
x= proposed project time
Z= number of standard deviations x
is from mean
Note: probability that time will be within specified = area
Probability that time will exceed = 1-area
202
Example
What is the probability the project will be

completed within 22 weeks given a variance of 6.89
weeks, and a mean of 25 weeks?
203
Solution
What is the probability the project will be

completed within 22 weeks given a variance of 6.89
weeks, and a mean of 25 weeks?
2 = 6.89 weeks
x-
Z =
P(x 22 weeks) = 6.89
= 2.62 weeks = 22 - 25
2.62
= -1.14
From Table B (Appendix B) a Z score

of -1.14 corresponds to a probability
of 0.1271. Thus P(22) = 0.1271
x = 22 = 25 Time
(weeks)
204
Project Completion Time
To determine the probability that the PROJECT will

be completed within the specified time
Calculate the probability that each path will be completed
within the specified time
Multiply these probabilities
205
Simulation
Used when activity times may be interdependent

repeated sampling
Many passes are made through the network
In each pass, random value for each activity selected from
the probability distribution
After each pass, projects duration is determined
After many passes, a frequency distribution of the project
duration is prepared
This frequency distribution is used for probabilistic
estimates of project duration
206
Project Execution and Control
Project Execution
Performance of activities planned
Funds spent, resources used
Project Control
Assessing progress against plans
Taking corrective actions as needed
Trend analysis generates forecasts of costs, completion time, etc.
Controlling changes
Scope creep = problem of uncontrolled changes to project scope
207
Project Execution
Eli Goldratt considered 2 psychological principles:

a) Students Syndrome = a student tends to delay the start of
an assignment until the last possible time, and
b) Parkinsons law = work expands to fill the time available
for its completion.
Therefore:
do not disclose due dates of activities to workers.
prioritize, schedule accordingly, and do activities asap.
eliminate padding in activity time estimates
add buffer time to end of critical chain (= longest path
considering constraints)
208
CRASHING
Sounds way cooler than it is

Manager often have options that will allow the to
shorten (crash) certain activities
Things like extra funds, personnel, equipment
They are relaxing the work specifications
Increasing direct expenses in order to save on

indirect project costs
209
Crashing reduces indirect, but increases direct costs
Total cost is minimized at optimum amount of crashing
Total Cost
C
O
S
T Cumulative
(direct)
cost of crashing
Expected
indirect CRASH
Costs
Shorten
Optimum
210
Crashing
Normal Time: time to complete an activity with no extra

cost
Crash Time: minimum time to complete an activity if it is
crashed and more resources are put in
Max Possible Crashing = CT NT
Normal Cost: cost of an activity completed in NT

Crash Cost: cost of an activity completed at CT
Crashing cost per period: cost to crash an activity by one
period (UNITS)
211
Heuristic Approach
1. Reducing the length of the critical path(s)
2. Get estimates of NT and CT for each activity
3. Determine all path lengths and slack times
4. Determine critical activities
5. Reduce length of critical path by reducing duration of activities on the
path
6. Select the least cost critical activity, reduce by one time unit, and trace
that change through the remainder of the network
7. A new critical path may be created
8. When there is more than one critical path, reduce all
9. If the length of the project needs to be reduced further, process is
repeated
212
Example
Activity Pred Regular Crash Regular Crash Max Crash
Duration Duration Cost Cost Possible Cost
Crashing Per Day
A - 10 8 40 50 2
B - 7 5 20 40 2
C B 5 4 98 100 1
D A,C 8 5 29 50 3
E B 12 10 8 20 2
Total Normal Cost 195
A. Calculate Regular Project Completion time and Cost

B. Crash project one day at a time, choosing the minimum crashing option at each step,
to minimum possible completion time. What is the minimum cost of completing the
project at this minimum time.
C. Calculate cost of completing the project in 16 days
213
FIRST: Find Crash Cost/Day
Duration Duration Cost Cost Possible Cost Per
Crashing Day
A - 10 8 40 50 2 5
B - 7 5 20 40 2
C B 5 4 98 100 1
D A,C 8 5 29 50 3
E B 12 10 8 20 2
Crash Cost/Day = (CC-NC)/(NT-CT)

(A) = (50-40)/(10-8)
=5
214
Duration Duration Cost Cost Possible Cost Per
Crashing Day
A - 10 8 40 50 2 5
B - 7 5 20 40 2 10
C B 5 4 98 100 1 2
D A,C 8 5 29 50 3 7
E B 12 10 8 20 2 6
215
NEXT SET UP TABLE
Initial Crash Activity or Activities on Critical Path to Decrease Longest Path by

at least 1 day
A (10) B(7) C(5) D(8) E(12) Path
Length
A-D A D 18
B-C-D B C D 20
B-E B E 19
Crash Cost per 5 10 2 7 6
Unit
Max Available 2 2 1 3 2
Crash Days
Cumulative 0 0 0 0 0
Crash Days
Total Project Cost = Normal Cost + Crashing Cost = 195 + 0 = 195
216
Start Crashing
Crashing Crash Activity or Activities on Critical Path to Decrease Longest Path
by at least 1 day
Crash Activity C by 1 day, Cost = $2
A B(7) C(4) D(8) E(12) Path

(10 Length
)
A-D A D 18
B-C-D B C D 19
B-E B E 19
Unit
Crash Days
Cumulative Crash 1
Days
Total Project Cost = Normal Cost + Crashing Cost = 195 + 2 = 197
Once you crash an activity as much as you can, cross it out (so cross out C)
217
Crashing Crash Activity or Activities on Critical Path to Decrease Longest Path by
at least 1 day
Crash Activity B by 1day, Cost = $10
A B(6) C(4) D(8) E(12) Path

(10) Length
A-D A D 18
B-C-D B C D 18
B-E B E 18
Unit
Crash Days
Cumulative Crash 1 1
Days
Total Project Cost = Normal Cost + Crashing Cost = 195 + 2 + 10 = 207
You now have two critical paths, have to crash activities on both. Crashing
B for 10 is cheaper than crashing D for 7 and E for 6 so you crash B.
218
at least 1 day
Crash Activity D by 1day and E by 1 day, Cost = $13
A (10) B(6) C(4) D(7) E(11) Path

Length
A-D A D 17
B-C-D B C D 17
B-E B E 17
Unit
Crash Days
Cumulative 1 1 1 1
Crash Days
Total Project Cost = Normal Cost + Crashing Cost = 195 + 2 + 10 + 13 = 220
Now all 3 are critical paths so you have to crash activities on each. B and D covers
two paths but D is cheaper. You therefore have to crash E on the final path
219
at least 1 day
Crash Activity D by 1day and E by 1 day, Cost = $13
A B(6) C(4) D(6) E(10) Path

(10) Length
A-D A D 16
B-C-D B C D 16
B-E B E 16
Unit
Crash Days
Cumulative 1 1 2 2
Crash Days
Total Project Cost = Normal Cost + Crashing Cost = 195 + 2 + 10 + 13 + 13 = 233
Crashing D and E again

220
All crashed out
at least 1 day
Crash Activity A by 1day and B by 1 day, Cost = $15
A (9) B(5) C(4) D(6) E(10) Path

Length
A-D A D 15
B-C-D B C D 15
B-E B E 15
Unit
Crash Days
Cumulative 1 2 1 2 2
Crash Days
Total Project Cost = Normal Cost + Crashing Cost = 195 + 2 + 10 + 13 + 13 + 15 = 248
C and E are now out. We still have to crash activities on all of the paths, crash B and A.
Once you have done that you notice that B is now out of crashing days. You could no
longer crash any activities on the final critical path and are now done crashing!
221
Answer the questions
A.Calculate Regular Project Completion time and Cost

Regular Time = 20 days at $195
B.Crash project one day at a time, choosing the minimum

crashing option at each step, to minimum possible
completion time. What is the minimum cost of completing
the project at this minimum time.
$248
C.Calculate cost of completing the project in 16 days

$233
222
ALL DONE
THANKS FOR JOINING
GOOD LUCK ON YOUR
EXAM!!!
Heres a hideously
adorable baby sloth to
make you smile.
223

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BU385 Final Exam

TAUGHT BY EMILY SYCZ

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Annual undergraduate business competition

Fourth Year Business/Math Double

1. Process Design and Facility Layout Chapter 6

* Tips and tricks throughout

First step in process design is to consider whether to make or

Strategic decision based on the following factors:

The specific configuration of physical facilities in an

See your textbook for many more examples!

Example: Emergency Ward in a Hospital

Example: movie theatres, small bakery

Example: Ticket collectors at sport events, automatic car wash

Example: sugar, internet service

Dimension Job Shop Batch Repetitive/ Continuous

Equipment Very high Moderate Low Very low

Inefficient Steel Production

Hybrid processes are very common these are

Automation: using machinery equipment with

Three kinds: Fixed, Programmable, Flexible

Example: car manufacturers

Use of high-cost, general-purpose equipment

Uses equipment that is more customized than

Computer-Integrated Manufacturing (CIM)

Layout: the arrangement of departments, work

For job shop and batch processes (variety)

Different machines arranged in a cell

Group technology: identifying items with similarities in

Nature of the product dictates this type of

1. Draw and label a precedence diagram

Draw and label a Calculate DESIRED Calculate theoretical

GROUP Elements into

Cycle time is the maximum time

0.1 min. 1.0 min.

CT = available work time/desired output

Some Heuristic (intuitive) Rules:

Task Time (Mins) Description Predecessors

Min Work Stations = sum of task times/CT

Assign based on number of successors, break

NA = 3, CT = 4.2, Idle Times = 1.25

Percentage Idle Time = sum idle times

design the jobs

30/hr. 30/hr. 30/hr. 30/hr.

30/hr. 2 min. 30/hr.

Goal: minimize material handling costs

Option 1: Block Diagramming

Loads between departments (per day)

Unit load STEPS

COPYRIGHT 2009 JOHN WILEY & SONS,

Five departments are to be assigned to location B-F

Distance between Centres of Locations (metres)

We can now see that department 1 and 2 have the

Other model is too restrictive as it only minimizes

Must be attractive and functional

Job design involves specifying the content (what)

For Company: For Worker:

For Company: For Workers:

2. Discuss the job with the operator and supervisor

3. Study and document the present method

4. Question the present method and propose a new one