Operations Management

1. Operations Management Unit 5 Project Management HL ONLY

2. Learning Objectives • Construct and interpret a network diagram • Analyse how critical path analysis (CPA) and network diagrams can be used to help with project management • Apply CPA to different projects • Evaluate the usefulness of a network in the management of projects

3. Critical Path Analysis (CPA) • A planning technique that identifies all tasks in a project, puts them in the correct sequence and allows for the identification of the critical path Critical Path Analysis is a planning and management tool with the following advantages: • Allows a business to plan ahead - efficiency • Is time related giving an accurate plan • Enables resources to be planned ahead • Allows for good management • Helps with cash flow management • Reduces waste • CPA may be used as part of the decision making process to allow a business to plan and monitor operations • Time related – identifies the maximum time for an operation to be completed • Identify potential problems in implementing operation Identifies where and when resources (including human ones) are needed

4. Critical Path Analysis CPA is sometimes called network analysis It’s a tool used to plan activities so that a job can be completed in the SHORTEST time It breaks down a job into a number of tasks and looks at their DEPENDENCIES Used commonly in manufacturing and construction

5. Parts of a Network

7. A simple Network diagram

8. Illustrating simultaneous activities

9. Developing the network

10. Earliest Start Time (EST) • The main reason for drawing a network is to identify the CRITICAL activities • To do this we must calculate the earliest time at which any given activity can start • This is called the Earliest Start Time (EST) of the activity EST = EST of Previous activity + Duration of previous activity

11. Earliest Start Time (EST)

12. EST and simultaneous activities

13. EST Recap • The EST of the first activity is always ZERO • Calculate the EST by working Left to Right across a network EST = EST of Previous activity + Duration of previous activity • When there are 2 simultaneous activities the HIGHEST figure is used as the EST

14. Latest Finish Time (LFT) • There is one final piece of information needed to complete our network diagram • To identify the CRITICAL activities we must also know the latest time at which any given activity must end • This is called the Latest Finishing Time(LFT) of the activity • It is calculated by working BACKWARDS across the network using the following formula LFT = LFT at the end of following activity – Duration of following activity

15. Latest Finish Time (LFT)

16. LFT and simultaneous activities

17. LFT Recap • The LFT of the last activity is always equal to its EST • The LFT of the first activity is always ZERO • Calculate the LFT by working Right to Left across a network LFT = LFT at the end of following activity – Duration of following activity

20. The Float • Any activity without spare time is CRITICAL • Spare time is referred to as the FLOAT

21. Calculating the FLOAT • Total FLOAT = the amount of spare time available for an activity without delaying the whole project FLOAT= LFT – (EST+ Duration)

22. What does this mean? This data tells us: • Activity A can be delayed 2 weeks without delaying the whole project • Activity AA is CRITICAL • any delay will hold up the project • Activity B is CRITICAL

24. Dummy Activities • Dotted line representing logical dependency

25. Dummy Activities

26. Identifying the Critical Path

28. Advantages of CPA • Managers need to consider exactly what activities are involved in a project • Managers can identify CRITICAL activities to be completed on time to get the whole project completed ASAP • Good use of CPA can enable managers to reduce time to market and costs, and make the business more efficient

29. Disadvantages of CPA • Diagrams can become complicated and unmanageable • Relies on good estimates from reliable staff • Can be padded to make performance look better than it really is • OR can be overoptimistic • Can make the company very dependent on suppliers and hence they need to be very reliable

30. Other issues • Managers must agree ‘what success looks like’ so that staff do not cut corners • Managers must also agree what resources and spend are available to the project • Managers must also watch the utilisation of resources throughout the project in order to schedule work to make the most of paid staff

31. CPA and Lean Production • Lean production aims to reduce wastage and thereby make a business more efficient and competitive. • Two operational strategies based on CPA to achieve Lean Production: • Kaizen (continuous improvement) • JIT – Just In Time production

32. Kaizen • Employees attempt to improve what they do in some small way every day • Small regular contributions from the whole firm can have big cumulative effects

33. JIT • Holding stock increases costs: • Warehousing, breakages, capital • JIT aims to minimise the stocks held at any point of the production process: Raw Materials and components Work in progress (unfinished goods) Finished goods