VILLANOVA UNIVERSITY

COLLEGE OF COMMERCE AND FINANCE

DEPARTMENT OF DECISION AND INFORMATION TECHNOLOGIES

EXAMPLE PROBLEMS

For
MBA 8503
OPERATIONS and SUPPLY CHAIN MANAGEMENT

MBA 8503
1)

The thickness of silicon wafers used in the production of semiconductors must be controlled
very carefully. The tolerance of one such product is specified as +0.0050 inches. In one
production facility, three wafers were selected each hour and the thickness measured
carefully to within one ten-thousandth of an inch as shown below. Construct the appropriate
control charts for this process.
Sample
1
2
3
4
5
6
7
8
9
10
11
12
13

2)

SOHAIL S. CHAUDHRY
Spring 2004
EXAMPLES: STATISTICAL QUALITY CONTROL

Observations
41
70
22
78
53
68
84
34
48
60
36
25
46
47
29
64
16
56
43
53
64
37
43
30
50
29
57
57
83
32
24
42
39
78
48
39
51
57
50

Sample
14
15
16
17
18
19
20
21
22
23
24
25

Observations
41
29
35
56
64
36
46
41
16
99
86
98
71
54
39
41
2
53
41
39
36
22
40
46
62
70
46
64
52
57
44
38
60
41
63
62

The operators of automated sorting machines in a post office must read the ZIP code on a
letter and divert the letter to the proper carrier route. Over one month's time, 25 samples of
100 letters were chosen, and the number of errors was recorded. This information is
summarized below. Develop a p chart for this process based on 3 standard deviations.

SAMPLE
Errors
Sample
Errors
Sample
Errors

3)

1
3
13
1
25
1

2
1
14
3

3
0
15
4

4
0
16
1

5
2
17
1

6
5
18
2

7
3
19
5

8
6
20
2

9
1
21
3

10
4
22
4

11
0
23
1

12
2
24
0

The following are the number of non-conformities found at assembly inspection of radio sets
during a given period of operation (6 sets = 1 inspection unit):

SUBASSEMBLY
NUMBER OF
SUBASSEMBLY
NUMBER OF
NUMBER
NOCONFORMITIES
NUMBER
NOCONFORMITIES
1
70
14
40
2
64
15
21
3
81
16
56
4
105
17
91
5
40
18
70
6
62
19
65
7
53
20
50
8
48
21
28
9
82
22
24
10
90
23
60
11
110
24
75
12
54
25
24
13
88
a) From these data set up a c-chart for use in the next period. Assume causes are found for all
points outside the preliminary control limits.
b) The number of non-conformities per inspection unit during the next period is as follows:
SUBASSEMBLY
NUMBER OF
SUBASSEMBLY
NUMBER OF
NUMBER
NOCONFORMITIES
NUMBER
NOCONFORMITIES
26
35
39
49
27
14
40
37
28
21
41
51
29
33
42
54
30
40
43
45
31
63
44
33
32
62
45
41
33
55
46
57
34
65
47
50
35
70
48
63
36
45
49
48

37
38

38
38

50

49

Plot these data on the control chart derived in (a). Indicate which points are outside the control
limits. Would you recommend revision of your control chart?
_
4) A process is in control with x = 75 and S = 2. The process specifications are at 80 + 8.
Estimate the potential capability and the actual capability.

MBA 8503

PROCESS CAPABILITY RATIO

The process-capability ratio is a measure of the ability of the process to manufacture product that meets
specifications. Table 1 shows several values of the PCR, along with the associated values of process fallout,
expressed in defective or nonconforming parts per million (PPM). These process fallouts were calculated assuming
a normal distribution for the quality characteristic, and in the case of two-sided specifications, assuming the
process mean is centered between the upper and lower specification limits. To illustrate the use of the table, notice
that a PCR of 1.00 implies a fallout rate of 2700 PPM for two-sided specifications, while a PCR of 1.50 implies a
fallout rate of 4 PPM for one-sided specifications.
Table 2 presents some recommended guidelines for minimum values of the PCR. The bottle-strength
characteristic is a parameter closely related to the safety of the product; bottles with inadequate pressure strength
may fail and injure consumers. This implies that the PCR should be at least 1. Perhaps one way the PCR could be
improved would be by increasing the mean strength of the bottles, say by pouring more glass in the mold.

Table 1
Values of the process-capability ratio (PCR) and associated process fallout for a normally
distributed process (in defective PPM)
Process Fallout (in defective PPM)
PCR
One-Sided Specifications
Two-Sided Specifications
0.25
226,628
453,225
0.50
66,807
133,614
0.60
35,931
71,861
0.70
17,865
35,729
0.80
8,198
16,395
0.90
3,467
6,934
1.00
1,350
2,700
1.10
484
967
1.20
159
318
1.30
48
96
1.40
14
27
1.50
4
7
1.60
1
2
1.70
0.17
0.34
1.80
0.03
0.06
2.00
0.0009
0.0018
Table 2
Recommended minimum values of the process-capability ratio

Existing processes
New processes
Safety, strength or critical
parameter, existing process
Safety, strength or critical
parameter, new process
MBA 8503

Two-Sided Specifications
1.33
1.50
1.50

One-sided Specifications
1.25
1.45
1.45

1.67

1.60

EXAMPLE: FACILITY LAYOUT

1) A warehouse processes six different products monthly: a, b, c, d, e, and f. Two alternative

layouts for the warehouse are being considered, A and B:

Layout A

Layout B

Receiving
(R)

Shipping
(S)

Shipping
(S)

Receiving
(R)

The products, their monthly production levels, their sequence of processing, and distances
between processing are shown in the following table:
Product

Number of Products
Processed/Month

Product
Sequences

A
B
C
D
E
F

1,000
3,000
2,000
3,000
2,000
2,000

R-1-S
R-2-S
R-3-S
R-4-S
R-5-S
R-6-S

Sequence Distances
Layout A Layout B
70 feet
70
50
50
30
30

50 feet
50
30
30
70
70

Which layout alternative minimizes the monthly warehouse travel? (Use load-distance analysis)

MBA 8503

EXAMPLES: FACILITY LOCATION

1) Consider four hospitals are located within a city at the following locations:
H1: (10, 6), H2: (8, 5), H3: (4, 3), H4: (15, 6)

Locate a centralized Blood-Bank facility that will serve the four hospitals. The number of
deliveries to be made per year between the Blood-Bank facility and each hospital is estimated to
be as follows:
D1 = 350, D2 = 900, D3 = 420, D4 = 1350
Determine the location of the Blood-Bank facility using the Center of gravity Method and the
Single Facility Layout with rectilinear distance measure.
2) A soft drink manufacturer is considering opening an additional plant to serve its customers.
The firm has three plants at Metro, Ridge, and Colby with capacities of 40,000, 30,000, and
25,000 cases per week. The estimated demands at the five warehouse localities of W1, W2,
W3, W4, and W5 are 24,000, 22,000, 23,000, 21,000, and 15,000 cases per week,
respectively. The manufacturer has identified two alternative new sites, N1 and N2. The new
plant will have a capacity of 10,000 cases per week. The estimated shipping costs per case for
the various routes are given below:
To
From

W1

W2

W3

W4

W5

Metro

0.80

0.75

0.60

0.70

0.90

Ridge

0.75

0.80 0.85

0.70 0.85

Colby

0.70

0.75 0.70

0.80 0.80

N1

0.60

0.70 0.80

0.75 0.70

N2

0.75

0.85 0.60

0.60 0.75

If the firm wants to locate only one additional plant and wants to minimize the total shipping cost
under these conditions:
a) All routes are acceptable.
b) Route Ridge-W4 is unacceptable.
c) What is the additional cost of the Ridge-W4 route not being acceptable?
d) How would the solutions change if the demand at W1 was increased by 5,000 cases per week?

MBA 8503

EXAMPLES: FORECASTING

1) Develop a three period moving average for the data given below and forecast for period 12.
Also, find the mean error, mean absolute error, and mean squared error.
Period
1
2
3
4
5
6
7
8
9
10
11
12

Demand
2,000
1,350
1,950
1,975
3,100
1,750
1,550
1,300
2,200
2,770
2,350
------

Forecast
---------------1,767
1,758
2,342
2,275
2,133
1,533
1,683
2,090
2,440
Total:
Mean:

Error
---------------+208
+1,342
-592
-725
-833
+667
+1,087
+260
-----+1,414
+177

Error
---------------208
1,342
592
725
833
667
1,087
260
------

(Error)2
---------------43,264
1,800,964
350,464
525,625
693,899
444,889
1,181,569
67,600
------

5,714
714

5,108,264
638,533

2) Develop an exponential smoothing model to forecast for period 12, using

find the mean error, mean absolute error, and mean squared error.
Period
1
2
3
4
5
6
7
8
9
10
11
12

Demand
2,000
1,350
1,950
1,975
3,100
1,750
1,550
1,300
2,200
2,770
2,350
------

Forecast
-----2,000
1,935
1,937
1,940
2,056
2,026
1,978
1,910
1,939
2,023
2,056
Total:
Mean:

= 0.1. Also,

Error
------650
+15
+38
+1,160
-306
-476
-678
+290
+831
+327
------

Error
-----650
15
38
1,160
360
476
678
290
831
327
------

(Error)2
-----422,500
225
1,444
1,345,600
93,636
226,576
459,684
84,100
690,561
106,929
------

+551
+55

4,771
477

3,431,255
343,126

MBA 8503

FORECASTING

THE DELPHI METHOD

This approach to forecasting is perhaps the most common of the qualitative methods and has been
developed extensively by Olaf Helmer (1966) and others at the RAND Corporation. In this
technique the experts doing the forecasting form a panel and then deal with a specific question,
such as when will a new process gain widespread acceptance or what new developments will take
place in a given field of study. Rather than meeting physically to debate the question however,
these experts are kept apart so that their judgements will not be influenced by social pressure or
by other aspects of small group behavior. An example of how this approach has been used should
demonstrate its procedural characteristics.
PHASE 1.

The experts on the panel (numbering five) were asked in a letter to name
inventions and scientific breakthroughs that they thought were both urgently
needed and could be achieved in the next 50 years. Each expert was asked to send
his list back to the coordinator of the panel. From these lists a general list of 50
items were compiled.

PHASE 2.

The experts were then sent the list of 50 items and asked to place each of them in
one of the five-year time periods into which the next 50 years had been divided, on
the basis of a 50-50 probability that it would take a longer or shorter period of
time for the breakthroughs to occur. Again experts were asked to send their
responses to the panel coordinator. (Throughout this procedure the experts were
kept apart and asked not to approach any other members of the panel.)

PHASE 3.

Letters were again sent to the experts which told them on which items there was a
general consensus and asking those who did not agree with the majority to state
their reasons. On those items on which there was no general agreement the
experts were also asked to state their reasons for their widely divergent estimates.
As a result, several of the experts re-evaluated their time estimates and a narrower
range for each breakthrough was determined.

PHASE 4.

To narrow the range of time estimates still further the Phase 3 procedure was
repeated. At the end of this phase 31 of the original 49 items on the list could be
grouped together as breakthroughs for which a relatively narrow time estimate of
their occurrence has been obtained. Thus the government agency which had
initiated this forecasting exercise was able to obtain considerable information about
the major breakthroughs and, for at least 31 of them, when they were most likely
to occur.

The Delphi method, unlike many forecasting methods, does not have to produce a single answer
as its output. Instead of reaching a consensus, the Delphi approach can leave a spread of
opinions, since there is no particular attempt to get unanimity. The objective is to narrow down
the quartile range as much as possible without pressuring the respondent. Thus justified deviant
opinion is allowed by this approach. Helmer describes a characteristic of the Delphi technique as
follows:
The effect of placing the onus of justifying relatively extreme responses on the respondents had the effect of causing
those without strong conviction to move their estimate closer to the median, while those who felt they had a good
argument for a deviationist opinion tended to retain their original estimate and defend it (Helmer, 1966).

The Delphi method is by no means without disadvantages. The general complaints against it have

been insufficient reliability, over sensitivity of results to ambiguity of questions, difficulty in

assessing the degree of expertise, and the impossibility of taking into account the unexpected
(Gordon, 1964). These complaints are only relative, and the Delphi method should be judged in
terms of the available alternatives. The same objections apply even more critically to the less
systematic methods of forecasting.
A variety of situations exist within business or nonprofit institutions in which the Delphi technique
can be utilized with only minor modifications. In the corporate setting this technique is generally
used by groups of experts both in and outside the company. An important aspect of such a group
is that each expert need not be well qualified in exactly the same area. Rather, each can be
qualified in only subparts of the area of concern, with at least one expert in every subpart. In this
way the entire problem area is covered and information can be processed about several areas of
interest.
In the corporate setting the initial questionnaire distributed to the group of experts might seek to
establish the general products or production processes for which there will be future demand. The
subsequent phases would then give the panel members feedback on the results of the first phase
and would attempt to have the panel reach some consensus on the problem. The final phases
might seek to detail some of the specific products and processes on which there was a consensus
and attempt to discover the best of the available alternatives and the time at which they could be
expected to be ready.

MBA 8503

EXAMPLE: CAPACITY PLANNING

1) An engineer in the corporate R&D center at the corporate headquarters of Computer Products
Corporation (CPC) in San Jose, California has formalized a new product concept that applies fiber
optics technology to robotic industrial controls. CPC must now decide whether to provide for
long-range production capacity in its five-year plan or dispose of the project. If the idea is sold to
another company now in its preliminary form, it is estimated that it would sell for these amounts,
depending on the nature of the economic climate that exists:
Economic Climate
Positive
Neutral
Negative

Likelihood
0.4
0.5
0.1

Amounts of Sales
$1,000,000
700,000
500,000

It will cost approximately $500,000 to complete a new product development project for the idea,
and the R&D center estimates only a 50 percent likelihood of a successful project. If the project
is unsuccessful, the idea could not then be sold and the entire cost of the project would be lost. If
the project is successful, CPC may either produce and market the new product or sell the
production and marketing rights for the new product. If the new product is produced and
marketed, the amount of net present value of the returns (net present value means that the returns
are expressed in terms of today's dollars), including the cost of the development project, is
dependent on the size of the market that ultimately materializes:
Size of Market
Large
Marginal

Likelihood
0.3
0.7

Returns
$12,000,000
1,000,000

If CPC sells the newly developed product, the net present value of the returns (including the cost
of the development project) is dependent on the economic climate at the time of the sale:
Economic Climate
Positive
Neutral
Negative

Likelihood
0.4
0.5
0.1

Returns
$6,000,000
4,000,000
2,000,000

a) Use a decision tree analysis and recommend a course of action for CPC for this new-product
idea.
b) If CPC follows your recommendation, what net present value of returns should CPC expect to
receive?

MBA 8503

EXAMPLES: AGGREGATE PLANNING

1) Consider the demand schedule given in Table 1. Suppose that there is no initial inventory and
that the sources of production in each period are regular time at a cost of $100 per unit,
overtime at a cost of $107 per unit, and subcontracting at a cost of $113 per unit. The
inventory holding costs are $2 per unit per period. No shortages are to be planned. Regular
time capacity is 180 units in each period and overtime capacity is 36 units. Subcontracting up
to 50 units is available in each period. Use the transportation tableau and show the optimal
solution. Table 2 summarizes the optimal production program and the resulting inventory
levels as developed by using the transportation tableau.
TABLE 1

Demand Forecast for Example 1

Period
1
2
3
4
5
6
7
8
9
10
11
12
13

TABLE 2
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
Total

Regular Time
140
180
180
180
180
180
180
180
180
180
180
180
140
2260

Expected Demand
100
180
220
150
100
200
250
300
260
250
240
210
140

Cumulative Demand
100
280
500
650
750
950
1200
1500
1760
2010
2250
2460
2600

Solution to Example 2
Production Overtime

36
36
36
36
36
36
30
246

Subcontracted

36
34
24
94

Requirements
100
180
220
150
100
200
250
300
260
250
240
210
140
2600

End-of-Period Inventory
40
40
0
30
110
126
92
8
0
0
0
0
0

Transportation Tableau for Aggregate Planning

4 x 4 Matrix
Period of Use
Period of Production
Beginning
Inventory
Regular
1

Overtime
Subcontract
Regular

Overtime
Subcontract
Regular

Overtime
Subcontract
Regular

Overtime
Subcontract
Demand

Capacity

2) The central terminal at the Quick Cargo (Air Freight Company) receives air freight from
aircraft arriving from all over the United States and redistributes it to aircraft for shipments to
all U.S. destinations. The company guarantees overnight shipment of all parcels, so enough
personnel must be available to process all cargo as it arrives. The company now has 24
employees working in the terminal. The forecasted demand for warehouse workers for the
next 7 months is 24, 26, 30, 28, 28, 24, and 24. It costs $2,000 to hire and $3,500 to lay off
each worker. If overtime is used to supply labor beyond the present work force, it will cost
the equivalent of $2,600 more for each additional worker. Should the company use a level
capacity with overtime or a matching demand plan for the next 6 months?

MBA 8503

EXAMPLES: LINEAR PROGRAMMING

1) The owner of a business that makes and sells wood products intends to expand the work
schedule by one-half day each week and wants to optimize the use of that additional time.
The firm makes five different items: a chair, a table, a desk, a bookcase, and a food serving
cart. The respective profits per units are $16, $30, $40, $42, and $32. The products require
essentially the same basic operations: cutting, sanding and finishing, and assembly. The times
for these operations differ for the various items, but they are fairly standard. The times are
shown in the following table:

Item
Chair
Table
Desk
Bookcase
Food Cart

Cutting
8
6
9
9
12

Time(minutes)per operation
Sanding and Finishing
12
10
15
12
8

Assembly
4
3
5
4
6

There are 320 minutes available for cutting, 400 for sanding and finishing, and 270 for assembly.
What combination of products should be produced in the additional period each week in order to
maximize profits?
4)

A dietitian has been asked by the athletic director of a university to develop a snack that
athletes can use in their training programs. The dietitian intends to mix two separate
products to make the snack. The following information has been obtained by the dietitian:
NUTRIENT

Carbohydrates
Protein
Calories

MINIMUM AMOUNT
REQUIRED (GR.)
20
12
450

CONTRIBUTION
PER PRODUCT A
2
6
90

OUNCE (GR.)
PRODUCT B
5
1
50

Product A costs $0.20 per ounce and product B costs $0.10 per ounce.
a) Determine the optimal quantities of the two products for cost minimization? What is the cost
per snack?
b) Are any requirements exceeded? If so, which ones, and by how much?

3) A certain corporation has three branch plants with excess production capacity. All three plants
have capability for producing a certain product, and management has decided to use some of the
excess production capacity in this way. This product can be made in three sizes--large, medium,
and small--that yield a net profit of $385, $330, and $275, respectively. Plants 1, 2, and 3 have
excess labor and equipment capacity to produce 750, 900, and 450 units per day per product,
respectively, regardless of the size or combination of sizes involved. However, the amount of
available in-process storage space also imposes a limitation on the production rates. Plants 1, 2,
and 3 have 13,000, 12,000, and 5,000 square feet of in-process storage space available for a day's
production of this product. Each unit of the large, medium, and small sizes produced per day
requires 20, 15, 12 square feet, respectively.
Sales forecasts indicate that 900, 1200 and 750 units of the large, medium, and small sizes,
respectively, can be sold per day.
To maintain a uniform workload among the plants and to retain some flexibility, management has
decided that their additional production assigned to the respective plants must use the same
percentage of excess labor and equipment capacities.
Management wishes to know how much of each of the sizes should be produced by each of the
plants to maximize profits.
(a) Formulate the linear programming model for this problem.
(b) Use a microcomputer software package to solve this problem.

Inventory Problems
Problem 1:
A manufacturer estimate that he will need 18,000 transistors of a particular type over the period
of 200 work-day year, or 90 transistors per day, in order to maintain the daily production rate that
his output requirements dictate. The cost of holding one unit of transistor for one year is $0.10
and ordering cost is $100 per order. Find the economic order quantity, time between orders, and
the minimum inventory cost.
Problem 2:
The Smith Company purchases 8000 units of a product each year. The supplier offers the units
for sale at $10 per unit for orders up to 500 units and $9 per unit for orders of 500 units or more.
What is the economic order quantity if the order cost is $30 per order and the holding cost is 30%
per unit cost per year?

Table: Typical MRP Matrix

Lot

Lead

On

Safety

Size

Time

Hand

stock

Allocated

Low

Item

Period

level
code

PD

1 2 3 4 5 6 7 8

Gross
requirements
Scheduled
receipts
Projected on
hand
Net
requirements
Planned
order receipts
Planned
order releases
The column entries are self-explanatory. The row entries have the following meanings:
Gross requirements: the total anticipated production, use, or withdrawals during each time period. For
end items (independent demand items), this quantity is obtained from the MPS; for components (dependent
demand items), it is derived from the planned order releases of their immediate parents.
Scheduled receipts (also known as on-order, open orders, or scheduled orders): material that is already
ordered (orders already released) and expected to arrive.
Projected on hand: the expected quantity in inventory at the end of the period to be available for demand
in subsequent periods. This is calculated by adding the projected on hand from the previous period to the receipts
for the period (scheduled receipts and planned order receipts) and subtracting the gross requirements for the same
period.
Net requirements: the difference between the gross requirements for the period and the total of the
scheduled receipts in the period and the projected on hand from the previous period. This indicates the net number
of items that must be provided to satisfy the parent or master schedule requirements. (The net requirement is zero
if the projected available inventory exceeds gross requirements).
Planned order receipts: the size of the planned order (the order has not been placed yet) in the period in
which it is needed. This appears in the same time period as the net requirements, but its size is modified by the
appropriate lot sizing policy. With lot sizing, the planned order quantity will generally exceed the net
requirements. Any excess beyond the net requirements goes into projected on hand inventory. With lot-for-lot
ordering, the planned order receipts is always the same as the net requirements.
Planned order releases: when the order should be placed (released) so the items are available when
needed by the parent. This is the same as the planned order receipts offset for lead time. Planned order releases at
one level generate material requirements at lower levels. When the order is placed, it is removed from the planned
order receipts and planned order releases rows entered in the scheduled receipts row. Planned order releases show
the what, how many, and when of MRP.

MBA 8503

Example: MRP

A company produces two products: Product A and Product Q. The owner has received an order
from a customer of 103 units of product A for week 8 and 200 units of product Q for week 7.
The product structures and other pertinent information are given below in the table. Develop a
materials requirements plan that will provide the customer the two products.
Item
A
Q
B
C
D
E

Item:
Week
GR
SR
AOH
NR
PORpt
PORlse
Item:
Week
GR
SR
AOH
NR
PORpt
PORlse
Item:
Week
GR
SR
AOH
NR
PORpt
PORlse
Item:
Week

Lead Time
(weeks)
4
2
3
2
1
1

Direct
Components
B(1), C(2)
C(1), E(1)
----D(1), E(2)
---------

Allocated

Safety Stock

On-Hand

10
0
0
0
0
0

5
6
0
0
0
0

18
6
10
20
0
30

Lot-Sizing
Rule
1
1
1
1
200
500

GR
SR
AOH
NR
PORpt
PORlse
Item:
Week
GR
SR
AOH
NR
PORpt
PORlse
Item:
Week
GR
SR
AOH
NR
PORpt
PORlse

MBA 8503

Operations Scheduling
DEFINITIONS

Processing Time (Pj): The amount of processing required by job j.

Ready Time (Rj): The point in time at which job j is available for processing.
Due Date (Dj): The point in time at which the processing of job j is due to be completed.
Completion Time (Cj): The time at which the processing of job j is finished.
Flow Time (Fj): The amount of time job j spends in the system.
Fj = Cj - Rj
Lateness (Lj): The amount of time by which the completion time of job j exceeds its due
date.
Lj = Cj - Dj
Tardiness (Tj): The lateness of job j if it fails to meet its due date, or zero otherwise.
Tj = max {0,Lj}
Mean Flow Time:
F = (1/n) F j

where
Mean Tardiness:
T = (1/n) T j

where n is the number of jobs

MBA 8503

EXAMPLES: SCHEDULING

1) The Jailbound Tax Service processes industrial customers tax jobs on a first-come first-served
basis but wonders if shortest processing time would be better. The jobs that are now waiting
to be processed are listed in the order in which they arrived, with their estimated processing
times, time to promised completion, and the necessary computations:
First-Come

First -

Served

Shortest

Processing

Time

(1)
Customer
Job

(2)
Estimated
Processing
Times
(Days)

(3)
Time to
Promised
Completion
(Days)

(4)
Job
Sequence

(5)
Flow
Time
(Days)

(6)
Tardiness
(Days)
(5)-(3)

(7)
Job Sequence

(8)
Flow
Time
(Days)

(9)
Tardiness
(Days)
(8)-(3)

A
B
C
D

5
3
10
8

8
6
24
22

1
2
3
4

5
8
18
26

--2
--4

2
1
4
3

8
3
26
16

----2
---

a) Rate the two sequencing rules on three evaluation criteria--average flow time, average number
of
jobs in the system, and average job tardiness.
b) Which sequencing rule would you recommend? Why?

MBA 8503

EXAMPLE: PROJECT MANAGEMENT

1) For the given activities and their immediate predecessors, find the early start, early finish, late
start, and finish for each activity. Also, determine the length of the critical path and the activities
along the critical path.
ACT.
A
B
C
D
E
F
G
H
I
J
K

IP
-----A
A
B
B
B,C
D
E,F
G
H
I,J

ET
4
12
3
6
4
3
3
2
5
3
1

ES

EF

Act: Activity
IP: Immediate Predecessors
ET: Expected Time (days)
ES: Early Start
EF: Early Finish
LS: Late Start
LF: Late Finish
TS: Total Slack
Early Finish = Early Start + Expected Time
Late Start = Late Finish - Expected Time
Total Slack = Late Start - Early Start = Late Finish - Early Finish

LS

LF

TS

2) American Computer Systems is planning to develop and market a new kind of mini-computer.
The activities that comprise the development and marketing of the computer are listed below
along with estimates of the times necessary to accomplish them.
Activity and
Activity
Designation
A: Hire
Engineers
B: Design
Hardware
C: Manufacture
Hardware
D: Design
Software
E: Test and
Integrate
F: Develop
Marketing Plan
Produce
Prototype
Produce
Technical
Manuals
I: Advertise
a)
b)
c)
d)

Predecessor
Activity

Optimistic Time
(weeks)

Most Likely
Time (weeks)

Pessimistic
Time (weeks)

---

10

20

21

22

10

15

26

12

18

36

C, D

12

15

---

14

18

34

15

20

25

19

F, G

11

15

25

Draw the appropriate network diagram.

Calculate the expected completion time.
Find the critical path.
What is the probability that the project will be done within 100 weeks?