1 project management inventory management – in-class example number 2 pencils at the campus...
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Project Management
Inventory Management – In-class ExampleInventory Management – In-class Example
Number 2 pencils at the campus book-store are sold at a fairly steady rate of 60 per week. It cost the bookstore $12 to initiate an order to its supplier and holding costs are $0.005 per pencil per year.
Determine The optimal number of pencils for the bookstore to purchase to minimize
total annual inventory cost, Number of orders per year, The length of each order cycle, Annual holding cost, Annual ordering cost, and Total annual inventory cost.
If the order lead time is 4 months, determine the reorder point. Illustrate the inventory profile graphically.
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Project Management
Lecture5
Project ManagementChapter 17
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Project Management
Project ManagementProject Management
How is it different? Limited time frame Narrow focus, specific objectives Less bureaucratic
Why is it used? Special needs Pressures for new or improves products or
services
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Project Management
Project ManagementProject Management
What are the Key Metrics Time Cost Performance objectives
What are the Key Success Factors? Top-down commitment Having a capable project manager Having time to plan Careful tracking and control Good communications
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Project Management
Project ManagementProject Management
What are the Major Administrative Issues? Executive responsibilities
Project selection Project manager selection Organizational structure
Organizational alternatives Manage within functional unit Assign a coordinator Use a matrix organization with a project leader
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Project Management
Project ManagementProject Management
What are the tools? Work breakdown structure Network diagram Gantt charts Risk management
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Project Management
Planning and SchedulingPlanning and Scheduling
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Locate new facilities
Interview staff
Hire and train staff
Select and order furniture
Remodel and install phones
Move in/startup
Gantt Chart
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Project Management
Deciding which projects to implement
Selecting a project manager
Selecting a project team
Planning and designing the project
Managing and controlling project resources
Deciding if and when a project should be terminated
Key DecisionsKey Decisions
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Project Management
Project ManagerProject Manager
Responsible for:
Work QualityHuman Resources TimeCommunications Costs
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Project Management
Temptation to understate costs
Withhold information
Misleading status reports
Falsifying records
Compromising workers’ safety
Approving substandard work
Ethical IssuesEthical Issues
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Project Management
Project Life CycleProject Life Cycle
Concept
FeasibilityFeasibility
PlanningPlanning
ExecutionExecution
TerminationTermination
Man
agem
ent
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Project Management
Work Breakdown StructureWork Breakdown Structure
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Project Management
PERT and CPMPERT and CPM
PERT: Program Evaluation and Review Technique
CPM: Critical Path Method
Graphically displays project activities Estimates how long the project will take Indicates most critical activities Show where delays will not affect project
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Project Management
The Network DiagramThe Network Diagram
Network (precedence) diagram
Activity-on-arrow (AOA)
Activity-on-node (AON)
Activities
consume resources and/or time
Events
points in time
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Project Management
Project Network – Activity on ArrowProject Network – Activity on Arrow
1
2
3
4
5 6
Locatefacilities
Orderfurniture
Furnituresetup
InterviewHire andtrain
Remodel
Move in
Figure 17.4
AOA
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Project Management
Project Network – Activity on NodeProject Network – Activity on Node
1
2
3
5
6
Locatefacilities
Orderfurniture
Furnituresetup
Interview
RemodelMove in
4
Hire andtrain
7S
Figure 17.4
AON
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Project Management
The Network Diagram (cont’d)The Network Diagram (cont’d)
Path Sequence of activities that leads from the starting
node to the finishing node AOA path: 1-2-4-5-6 AON path: S-1-2-6-7
Critical path The longest path; determines expected project
duration Critical activities
Activities on the critical path Slack
Allowable slippage for path; the difference the length of path and the length of critical path
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Project Management
Network ConventionsNetwork Conventions
a
b
c ab
c
a
b
c
d
a
b
c
Dummyactivity
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Project Management
Time EstimatesTime Estimates
Deterministic
Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation
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Project Management
Example 1Example 1
1
2
3
4
5 6
8 weeks
6 weeks
3 weeks
4 weeks9 weeks
11 weeks
1 week
Locate
facilities
Order
furniture Fu
rnitu
re
setup
InterviewHire
and train
Remodel Move in
DeterministicDeterministictime estimatestime estimates
Figure 17.5
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Project Management
Example 1 SolutionExample 1 Solution
P a t h L e n g t h( w e e k s )
S l a c k
1 - 2 - 3 - 4 - 5 - 61 - 2 - 5 - 61 - 3 - 5 - 6
1 82 01 4
206
Critical PathCritical Path
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Project Management
Network activities ES: early start EF: early finish LS: late start LF: late finish
Used to determine Expected project duration Slack time Critical path
Computing AlgorithmComputing Algorithm
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Project Management
Advantages of PERTAdvantages of PERT
Forces managers to organize
Provides graphic display of activities
Identifies
Critical activities
Slack activities1
2
3
4
5 6
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Project Management
Limitations of PERTLimitations of PERT
Important activities may be omitted
Precedence relationships may not be correct
Estimates may include a fudge factor
May focus solelyon critical path 1
2
3
4
5 6
142 weeks