Production and Operations Management The Sharon Construction Corporation

Production and Operations Management The Sharon Construction Corporation Case

TEAM 07 Christina Danver Ben Gumpert Adan Montoya Gurinder Virdi

Problem • Overhead cost of $500 per week for any delay after 48 weeks • Penalty of $15, 000 per week if project takes more than 52 weeks • Possible Labor Strike (12/01/04) • Possible Cold December

Alternatives 1. Expedite seat gallery supports 2. Expedite seat gallery supports and filling of the field 3. Expedite the roofing 4. Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring or heat when necessary; if a strike occurs, expedite all activities after resolution 5. Do nothing

Analysis of Baseline & A 5 • Do nothing (Tcp = 48+x weeks)

Analysis of A 1 • Expedite pouring concrete for seat gallery supports ($20, 000) (activity G from 12 to 6 weeks) (Tcp=42+x)

Analysis of A 2 • Expedite pouring concrete for seat gallery supports ($20, 000) (G from 12 to 6 weeks) and filling of the field ($10, 000) (C from 14 to 9 weeks) (Tcp = 42+x)

Analysis of A 3 • Expedite the roofing ($9, 000) (activity K from 8 to 2 weeks) (Tcp = 48+x)

Analysis of A 4 with 8 w strike • Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring or heat when necessary; if a strike occurs, expedite all activities after resolution ($3, 000 per week cut) (Tcp = 52)

Analysis of A 4 with 12 w strike • Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring or heat when necessary; if a strike occurs, expedite all activities after resolution ($3, 000 per week cut) (Tcp = 56)

Time analysis

Cost analysis

Risk Analysis

Risk Analysis

Risk Profiles

Risk Profiles

Recommendation 1. A 4: Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring; if a strike occurs, expedite all activities after resolution (lowest E(x)) 2. A 1: Expedite seat gallery supports (second lowest E(x))

Conclusion • • • A 1 is better than A 2 and A 3 if the probability/risk of a strike is considered. A 4 provides the option of speeding up the remaining tasks in case of a strike and doing nothing otherwise. This option is powerful. A 4 has a lower E(x), but a higher uncertainty SD(x) (broad range of losses from $0 to $76, 000) than A 1. The analysis of the risk profiles will help management to select the alternative which fits the corporation’s risk strategy. If the corporation is adverse to risk, it could select A 1 (losses are spread out from $20, 000 to $53, 000). A 1 has a lower uncertainty (SD(x)) than A 4. The project duration could be a factor for the decision, if there are projects on hold due to lack of resources.