Project Management Inventory Management Inclass Example Number 2

Project Management Inventory 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. 1

Project Management Lecture 5 Project Management Chapter 17 2

Project 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 · 3

Project 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 · 4

Project 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 5

Project Management · What are the tools? Work breakdown structure · Network diagram · Gantt charts · Risk management · 6

Project Management Planning and Scheduling Gantt Chart 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 7

Project Management Key Decisions · 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 8

Project Management Project Manager Responsible for: Work Human Resources Communications Quality Time Costs 9

Project Management Ethical Issues · Temptation to understate costs · Withhold information · Misleading status reports · Falsifying records · Compromising workers’ safety · Approving substandard work 10

Project Management Project Life Cycle Concept Planning Execution Management Feasibility Termination 11

Project Management Work Breakdown Structure 12

Project Management PERT and CPM PERT: CPM: · · Program Evaluation and Review Technique 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 13

Project Management The Network Diagram · Network (precedence) diagram · Activity-on-arrow (AOA) · Activity-on-node (AON) · Activities · · consume resources and/or time Events · points in time 14

Project Management Project Network – Activity on Arrow Figure 17. 4 AOA Locate facilities Order furniture 4 Furniture setup 2 Remodel 1 5 Interview 3 Move in 6 Hire and train 15

Project Management Project Network – Activity on Node Figure 17. 4 Order furniture AON Locate facilities Furniture setup 2 6 1 Move in Remodel 5 S Interview 3 7 Hire and train 4 16

Project Management The Network Diagram (cont’d) · Path · · Critical path · · The longest path; determines expected project duration Critical activities · · 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 Activities on the critical path Slack · Allowable slippage for path; the difference the length of path and the length of critical path 17

Project Management Network Conventions a c b a a c b b b d c Dummy activity 18

Project Management Time Estimates · Deterministic · · Time estimates that are fairly certain Probabilistic · Estimates of times that allow for variation 19

Project Management Example 1 Figure 17. 5 6 weeks Deterministic time estimates er e d r O tur i n fur Rem ode l 11 weeks re nitu Fur p u set 8 weeks ate es c Lo iliti fac 2 4 1 In te 4 weeks rv 3 weeks 5 d ie w r n a e Hi in a r t Move in 1 week 6 9 weeks 3 20

Project Management Example 1 Solution Critical Path 21

Project Management Computing Algorithm · Network activities ES: early start · EF: early finish · LS: late start · LF: late finish · · Used to determine Expected project duration · Slack time · Critical path · 22

Project Management Advantages of PERT · Forces managers to organize · Provides graphic display of activities · Identifies · Critical · Slack 4 activities 2 activities 1 5 6 3 23

Project Management Limitations of PERT · Important activities may be omitted · Precedence relationships may not be correct · Estimates may include a fudge factor · May focus solely on critical path 4 2 1 5 6 142 weeks 3 24