Course Title: Operations Management- Theory and Practice

Course Code: LOG4000

Assignment: 1
Name: Shuen Alex Chi Chung
Date: 16th Nov 2010

Qu 1

a. Operations management is an area of business concerned with the production of goods and
services, and involves the responsibility of ensuring that business operations are efficient in terms
of using as little resource as needed, and effective in terms of meeting customer requirements. It is
concerned with managing the process that converts inputs (in the forms of materials, labor and
energy) into outputs (in the form of goods and services).

Operations management is needed in organizations. The decisions it makes have a major impact on
both the cost of producing products or services and how well the products and services are
produced and delivered which has a major impact on the revenue coming into the organization. So,
operations management has an important impact on both revenue and cost and therefore profits.
Effective operations management can cost effectively increase efficiency, quality and
responsivenessto customers in order to give the organization a competitive advantage.

Company Core Competency Competitive Priorities

b(i). 1. Ability to design computing devices with High Performance Design- Apple
Apple Inc. exceptionally elegant ease-of-use produces unique and high quality
2. Ability to consistently enhance the future products. (eg. iPad)
generation of products
b(ii). 1. Using internet as distribution channel to Consistent Quality & Low Cost-
Dell eliminate the dependency of dealers and Dell transfer value of low cost to
Computer retailer customer by selling products at low
2. Has an effective and efficiency supply price as compared to its competitors.
chain management system Selling products at low cost and
maintaining the quality has been the
Competitive Priorities of Dell.
b(iii). 1. Well-developed organization structure Consistency in quality- helps to build
McDonald 2. Effective training provide at all levels the consumers’ trust in the brand and
3. Professional R&D and quality provides an assuring brand experience
management
b(iv). 1. Has total control of its operation (unlike Consistently high-quality service &
Starbucks the other franchise coffee shops) product- Starbucks offers its
2. Strong relationship with coffee bean customers a quality cup of coffee
growers served by attentive and knowledgeable
3. Attentive and knowledgeable staffs staff in a comfortable environment
Qu 2a

Qu 2b
Qu2c (vi)- Project duration 18 weeks

Schedule
All activities at normal times. No need to
crash any activity

Total Direct Cost

=$50+$80+$70+$60+$100+$40+$100
=$500

Computing crashing- 18 weeks

Activity Duration Can be crashed to Normal Cost Crashed Cost Crash Cost/ W On Critical Path?
A 2 1 50 70 20 Yes
B 4 2 80 160 40 Yes
C 8 4 70 110 10 No
D 6 5 60 80 20 No
E 7 6 100 130 30 Yes
F 4 3 40 100 60 No
G 5 4 100 150 50 Yes

Qu2c (v)- Project duration 17 weeks

Schedule
Crash only A by 1 week

Total Direct Cost

=$70+$80+$70+$60+$100+$40+$100
=$520

Revised Crashing- 17 Weeks

Activity Duration Can be crashed to Normal Cost Crashed Cost Crash Cost/ W On Critical Path?
A 1 1 - 70 - Yes
B 4 2 80 160 40 Yes
C 8 4 70 110 10 No
D 6 5 60 80 20 No
E 7 6 100 130 30 Yes
F 4 3 40 100 60 No
G 5 4 100 150 50 Yes
Qu2c (iv)- Project duration 16 weeks

Schedule
Crash A and E by 1 week each

Total Direct Cost

=$70+$80+$70+$60+$130+$40+$100
=$550

Revised Crashing- 16 Weeks

Activity Duration Can be crashed to Normal Cost Crashed Cost Crash Cost/ W On Critical Path?
A 1 1 - 70 - Yes
B 4 2 80 160 40 Yes
C 8 4 70 110 10 No
D 6 5 60 80 20 Yes
E 6 6 - 130 - Yes
F 4 3 40 100 60 Yes
G 5 4 100 150 50 Yes

Qu2c (iii)- Project duration 15 weeks

Schedule
Crash A, Eand Gby 1 week each

Total Direct Cost

=$70+$80+$70+$60+$130+$40+$150
=$600

Revised Crashing- 15 Weeks

Activity Duration Can be crashed to Normal Cost Crashed Cost Crash Cost/ W On Critical Path?
A 1 1 - 70 - Yes
B 4 2 80 160 40 Yes
C 8 4 70 110 10 No
D 6 5 60 80 20 Yes
E 6 6 - 130 - Yes
F 4 3 40 100 60 Yes
G 4 4 - 150 - Yes
Qu2c (ii)- Project duration 14 weeks

Schedule
Crash A, B,D, E and G by 1 week each

Total Direct Cost

=$70+$120+$70+$80+$130+$40+$150
=$660

Revised Crashing- 14 Weeks

Activity Duration Can be crashed to Normal Cost Crashed Cost Crash Cost/ W On Critical Path?
A 1 1 - 70 - Yes
B 3 2 - 120 40 Yes
C 8 4 70 110 10 No
D 5 5 - 80 - Yes
E 6 6 - 130 - Yes
F 4 3 40 100 60 Yes
G 4 4 - 150 - Yes

Qu2c (i)- Project duration 13 weeks

Schedule
Crash A, D, E, Fand G by 1 week each and
crash B by 2 weeks

Total Direct Cost

=$70+$160+$70+$80+$130+$100+$150
=$760

Revised Crashing- 13 Weeks

Activity Duration Can be crashed to Normal Cost Crashed Cost Crash Cost/ W On Critical Path?
A 1 1 - 70 - Yes
B 2 2 - 160 - Yes
C 8 4 70 110 10 No
D 6 5 - 80 - Yes
E 6 6 - 130 - Yes
F 3 3 - 100 - Yes
G 4 4 - 150 - Yes
Qu2d- Total Project Cost
Duration Direct cost Indirect cost Total project cost
18 500 400 900
17 520 350 870
*16 550 300 850
*15 600 250 850
14 660 200 860
13 760 150 910
*Both 15 & 16 weeks have the minimum total project cost of $850.

Qu2e
(i)- Both B & F employ “Oracle”
There is no impact for activities B & F to
employ “Oracle” because activity F starts
after the completion of activity B under the
normal time.

(ii)- Both B & C employ “Oracle”

Activities B & C have the same early start but
they cannot be started at the same time
because overtime is not allowed when
employing “Oracle”. Since activity B is on
the critical path and activity C has slacks of 8
weeks.Therefore,without effecting the project
duration, overtime can be avoided by
scheduling activity C to start after the
completion of B (but not later than B’s late
start, week10)

(ii)- Both C&F employ “Oracle”

ActivityC’searly finish is 10 and activity F’s
late start is 9. That means even C is
scheduled to be finished as early as possible
and F is scheduled to be started as late as
possible. There is still 1 week overtime
among both C & F. Therefore, without
delaying the project, the most cost effective
way to solve this 1 week overtime is to crash
C by 1 week and schedule F to start on week
9 (F’s late start). Total project cost will be
increased by $10.
Qu2f

Since activity A is completed and the

project has already used 2 weeks. In
order to complete the whole project
in 17 weeks. There is only 15 weeks
left for the remained project which
includes activities B, C, D, E, F&G.

Diagram 1 on the left shows that the

remained project can be completed
by simply crash activity E by 1
week.

In this case, the earliest start of

activity F is being delayed by 4
weeks. Theduration of the remained
project would then be postponed to
19 weeks. (ref diagram 2)

To determine whether the remained

project can still be completed in 15
weeks or not. It is necessary for us to
evaluate if the project duration can
be shorten from 19 weeks to 15
weeks by crashing some of the
activities.

As we can see from Diagram 2, there are only 3 activities D, F & G on the critical path and each of them can
only be crashed by 1 week max. By crashing all three of them, the duration of the remained project can only
be reduced to 16 weeks. That means the whole project will still be delayed by 1 week.

Since the project will not be able to complete on time with the impact of delay. My recommendation isto
minimize the impact as much as much possible by paying an addition cost of $150 (crash cost of A, D, F, G))
to crash activities D, F and G by 1 week each. Reduce 4 days delay to 1day only.