The document covers project management, defining it as the planning, scheduling, and controlling of resources for a major output. It discusses the work breakdown structure (WBS), three types of projects (pure, functional, matrix), and techniques like PERT and CPM for managing project timelines and costs. Additionally, it addresses project planning phases, the critical path method, and concepts such as slack time and project crashing for optimizing project delivery.

1. Operations and Supply Chain Management
MGMT 3306
Lecture 02
Instructor: Dr. Yan Qin
Outline
Project Management
What is Project Management?
Three types of projects
Work Breakdown Structure (WBS)
Project Management Techniques: PERT and CPM
Cost-Time Trade-Offs and Project Crashing
A Critique of PERT and CPM
2
Project Management
A project is a series of related jobs usually directed toward

2. some major output and requiring a significant period of time to
perform.
Project Management is the planning, scheduling, and controlling
of resources to meet the technical, cost, and time constraints of
the project.
3
Examples of Projects
Building Construction
Research Project
Three Phases of Project Management
The management of projects involves three phases:
Planning - goal setting, defining the project, team organization
Scheduling - relates people, money, and supplies to specific
activities and activities to each other
Controlling - monitors resources, costs, quality, and budgets;
revises plans and shifts resources to meet time and cost

3. demands
Project Planning
Figure 3.1
BeforeStart of projectDuring
projectTimelineproject
Project Scheduling
Figure 3.1
BeforeStart of projectDuring
projectTimelineproject

4. Project Controlling
Figure 3.1
BeforeStart of projectDuring
projectTimelineproject
Project Planning, Scheduling, and Controlling
Figure 3.1
BeforeStart of projectDuring
projectTimelineproject
Project Organizations
There are three types of project based on the organizational
structures used to tie the project to the parent firm:
Pure project: A self-contained team works full time on a

5. project;
Functional project: A project housed within a functional
division.
Matrix project: A project that uses people from different
functional areas.
The project manager decides what tasks to complete and when;
The functional managers control which people and technologies
to be used in the project.
10
Example of Matrix Project
MarketingOperationsEngineeringFinance
Project 1
Project 2
Project 3
Project 4

6. Work Breakdown Structure (WBS)
Work Breakdown Structure (WBS): defines the hierarchy of
project tasks, subtasks, and work packages
Program
Project 1
Project 2

7. Task 1.1
Subtask 1.1.1
Work Package 1.1.1.1
Level
1
2
3
4
Task 1.2
Subtask 1.1.2
Work Package 1.1.1.2
Task is a further subdivision of a project, usually shorter than
several months.
Work package is a group of activities combined to be assignable
to a single organizational unit, usually an individual.

8. 12
Example: WBS – Large Optical Scanner Design
13
Purposes of Project Scheduling
Shows the relationship of each activity to others and to the
whole project
Identifies the precedence relationships among activities
Encourages the setting of realistic time and cost estimates for
each activity
Helps make better use of people, money, and material resources
by identifying critical bottlenecks in the project
Project Management Techniques
Gantt chart
Critical Path Method (CPM)
Program Evaluation and Review Technique (PERT)

9. Gantt Chart
Charts are useful because their visual presentation is easily
understood.
Gantt chart: a bar chart showing both the amount of time
involved and the sequence in which activities can be performed
16
PERT and CPM
Both PERT and CPM are network techniques developed in
1950’s, which consider the inter-dependency among project
activities.
CPM by DuPont for chemical plants (1957): A project
management technique that uses only one time factor per
activity. (Activity times are assumed to be certain.)
PERT by Booz, Allen & Hamilton with the U.S. Navy, for
Polaris missile (1958): A technique that uses three time
estimates for each activity. (Activities times are assumed to be
uncertain.)

10. Questions PERT and CPM can answer
When will the entire project be completed?
What are the critical activities or tasks in the project?
Which are the noncritical activities?
What is the probability the project will be completed by a
specific date?
Is the project on schedule, behind schedule, or ahead of
schedule?
Is the money spent equal to, less than, or greater than the
budget?
If the project must be finished in a shorter time, what is the way
to accomplish this at least cost?
PERT and CPM: 6 Steps
Both PERT and CPM follow six basic steps:
Define the project and prepare the work breakdown structure
Develop relationships among the activities - decide which
activities must precede and which must follow others
Draw the network connecting all of the activities
Assign time and/or cost estimates to each activity
Compute the longest time path through the network – this is
called the critical path
Use the network to help plan, schedule, monitor, and control the
project

11. Step 3: Draw a project network
A project network is a diagram of all the activities and the
precedence relationships between the activities in a project.
There are two approaches for drawing a project network:
Activity-on-Node (AON): A network diagram in which nodes
represent activities.
Activity-on-Arrow (AOA): A network diagram in which arrows
represent activities.
AON Vs. AOA
Activity onActivityActivity on
Node (AON)MeaningArrow (AOA)

12. A comes before B, which comes before C.
(a)
A
B
C
B
A
C
A and B must both be completed before C can start.
(b)
A
C
C
B
A
B

13. B and C cannot begin until A is completed.
(c)
B
A
C
A
B
C
AON Vs. AOA
Activity onActivityActivity on
Node (AON)MeaningArrow (AOA)
C and D cannot begin until both A and B are completed.
(d)
A
B
C
D

14. B
A
C
D
C cannot begin until both A and B are completed; D cannot
begin until B is completed. A dummy activity is introduced in
AOA.
(e)
C
A
B
D
Dummy activity

15. A
B
C
D
AON Vs. AOA
Activity onActivityActivity on
Node (AON)MeaningArrow (AOA)
B and C cannot begin until A is completed. D cannot begin until
both B and C are completed. A dummy activity is again
introduced in AOA.
(f)
A
C
D
B
A
B

16. C
D
Dummy activity
AON Vs. AOA
The AOA approach sometimes needs the addition of a dummy
activity, represented by a dashed line, to clarify relationships.
A dummy activity consumes no time or resources, but is
required in AOA when
A network has two activities with identical starting or ending
events; or
Two or more activities follow some, but not all, “preceding”
activities.
We will focus on AON in this class.

17. AON Example: Milwaukee PaperActivityDescriptionImmediate
PredecessorsABuild internal components—BModify roof and
floor—CConstruct collection stackADPour concrete and install
frameA, BEBuild high-temperature burnerCFInstall pollution
control systemCGInstall air pollution deviceD, EHInspect and
testF, G
Table 3.1
Given the following activities and precedence relationships in a
project, draw an AON network representing the project.
AON Example: Project Network
A
Start
B
Start Activity
Activity A
(Build Internal Components)
Activity B
(Modify Roof and Floor)
We add a dummy activity called “Start” to serve as the unique
starting activity of the project since we have more than one
original starting activity (A and B) in this example.

18. AON Example: Project Network
C
D
A
Start
B
Activity A Precedes Activity C
Activities A and B Precede Activity D
We now add activity C and activity D to the network. Node C
represents activity C and Node D represents activity D.
Note that arrows indicate precedence relationships between
different activities in AON.

19. AON Example: Project Network
G
E
F
H
C
A
Start
D
B
Arrows Show Precedence Relationships

20. We will now look at Step 4
Both PERT and CPM follow six basic steps:
Define the project and prepare the work breakdown structure
Develop relationships among the activities - decide which
activities must precede and which must follow others
Draw the network connecting all of the activities
Assign time and/or cost estimates to each activity
Compute the longest time path through the network – this is
called the critical path
Use the network to help plan, schedule, monitor, and control the
project
Step 4: Determine project schedule
To determine project schedule, we calculate two distinct
starting and ending times for each activity.
Earliest start (ES): earliest time at which an activity can start,
assuming all predecessors have been completed.
Earliest finish (EF): earliest time at which an activity can be
finished
Latest start (LS): latest time at which an activity can start so as
to not delay the completion time of the entire project
Latest finish (LF): latest time by which an activity has to be
finished so as to not delay the completion time of the entire
project

21. 30
A node symbol with times
A
Activity Name or Symbol
Earliest Start
ES
Earliest Finish
EF
Latest Start
LS
Latest Finish
LF
Activity Duration

22. 2
Forward Pass
ES and EF are determined using Forward Pass.
In the forward pass, we begin with the starting node and work
forward.
Earliest Start Time Rule:
If an activity has only a single immediate predecessor, its ES
equals the EF of the predecessor
If an activity has multiple immediate predecessors, its ES is the
maximum of all the EF values of its predecessors
ES = Max {EF of all immediate predecessors}
Forward Pass
Earliest Finish Time Rule:
The earliest finish time (EF) of an activity is the sum of its
earliest start time (ES) and its activity time

23. Start
0
0
ES
0
EF = ES + Activity time
Take the Start node in the previous Milwaukee problem for
example:
Forward Pass
Here are the ES and EF of Node A in the previous Milwaukee
example:
Start
0
0

24. 0
A
2
2
EF of A = ES of A + 2
0
ES of A
Forward Pass

26. E
4
F
3
G
5
H
2
4
8
13
15
4
8
13
7

27. D
4
3
7
C
2
2
4

28. B
3
0
3
Start
0
0
0
A
2
2

29. 0
Here are the ESs and EFs of all the activities in the previous
Milwaukee example:
Backward Pass
In backward pass, we begin with the last event and work
backwards.
Latest Finish Time Rule:
If an activity is an immediate predecessor for just a single
activity, its LF equals the LS of the activity that immediately
follows it
If an activity is an immediate predecessor to more than one
activity, its LF is the minimum of all LS values of all activities
that immediately follow it
LF = Min {LS of all immediate following activities}
Backward Pass
Latest Start Time Rule:
The latest start time (LS) of an activity is the difference of its
latest finish time (LF) and its activity time
LS = LF – Activity time

30. Milwaukee Example: LS/LF

31. E
4
F
3
G
5
H
2
4
8
13

32. 15
4
8
13
7
D
4
3
7
C

33. 2
2
4
B
3
0
3
Start
0
0
0

34. A
2
2
0
LF = EF
of Project
15
13
LS = LF – Activity time
We start from the ending node and work backward.
Milwaukee Example: LS/LF

36. E
4
F
3
G
5
H
2
4
8
13
15
4
8
13
7
13
15

37. D
4
3
7
C
2
2
4

38. B
3
0
3
Start
0
0
0

39. A
2
2
0
LF = Min(LS of following activity)
10
13
LF of Node F = LS of Node H since Node H is the only node
following Node F.
Milwaukee Example: LS/LF

40. E
4
F

41. 3
G
5
H
2
4
8
13
15
4
8
13
7
13
15
10
13
8
13
4
8

42. D
4
3
7
C
2
2
4

43. B
3
0
3
Start
0
0
0
A
2
2

44. 0
LF = Min(4, 10)
4
2
There are two nodes, Node E and Node F, following Node C.
Milwaukee Example: LS/LF

45. E
4
F
3
G

46. 5
H
2
4
8
13
15
4
8
13
7
13
15
10
13
8
13
4
8
D

47. 4
3
7
C
2
2
4
B
3
0

48. 3
Start
0
0
0
A
2
2
0
4
2
8
4

49. 2
0
4
1
0
0
Project network with all the ES/EF and LS/LF.
We will now look at Step 5
Both PERT and CPM follow six basic steps:
Define the project and prepare the work breakdown structure
Develop relationships among the activities - decide which
activities must precede and which must follow others
Draw the network connecting all of the activities
Assign time and/or cost estimates to each activity
Compute the longest time path through the network – this is
called the critical path
Use the network to help plan, schedule, monitor, and control the
project
Step 5: Determine Critical Path
The critical path is the longest path through the network.
The critical path is the shortest time in which the project can be
completed.

50. Any delay in critical path activities delays the project.
Critical path activities have no slack time.
So in order to find the critical path(s), we need to first calculate
the slack times of each activity and identify the activities with
zero slack time.
Notes – Critical path and ES EL
Any sequence of activities between a project’s start and finish
is a path.
The critical path is just the path that takes the longest time to
complete.
There can be more than one critical paths.
An activity can be started at ES, LS, or any time between ES
and LS.
Notes – Slack times
Activity slack is the maximum length of time an activity can be
delayed without delaying the entire project.
Activities on the critical path have zero slack.
Activity slack can be calculated in two ways:

51. Slack = LS – ES OR
Slack = LF – EF
Example: Milwaukee
We have calculated the ES/EF, LS/LF times for the activities in
the Milwaukee example. Now we would like to determine the
critical path of the project.
EarliestEarliestLatestLatestOn
StartFinishStartFinishSlackCritical
ActivityESEFLSLFLS – ESPath?
A02020Yes
B03141No
C24240Yes
D37481No
E48480Yes
F4710136No
G8138130Yes
H131513150Yes

52. Example: Milwaukee

53. E
4
F
3
G
5
H
2
4
8
13
15
4
8
13
7
13

54. 15
10
13
8
13
4
8
D
4
3
7

55. C
2
2
4
B
3
0
3
Start
0
0

56. 0
A
2
2
0
4
2
8
4
2
0
4
1
0
0
The path formed by blue arrows is the critical path.

57. Example: Start from Step 3
Consider the following consulting project:
Identify the critical path in the project and determine the
duration of the critical path and slack times for all activities.
Detailed solution is given in the document titled “In-class
examples” posted under this week’s learning module.
Activity
Designation
Immed. Pred.
Time (Weeks)

58. Assess customer's needs
A
None
2
Write and submit proposal
B
A
1
Obtain approval
C
B
1
Develop service vision and goals
D
C
2
Train employees
E
C
5
Quality improvement pilot groups
F
D, E
5
Write assessment report
G
F
1

59. 48
Variability in Activity Times
CPM assumes we know a fixed time estimate for each activity
and there is no variability in activity times
PERT uses a probability distribution, Beta distribution, for
activity times to allow for variability
Statistical analysis requires three reasonable estimates of
activity times
Optimistic time (a)
Most likely time (m)
Pessimistic time (b)
Beta Distribution
The mean of the beta distribution can be estimated by

60. The variance of the beta distribution for each activity is
We use Beta Distribution to calculate the mean and variance of
the completion time of each activity.
Example: Mean and Variance
Suppose that the project team has arrived at the following time
estimates for activity B (site selection and survey) of the St.
John’s Hospital project:
a = 7 weeks, m = 8 weeks, and b = 15 weeks
Calculate the expected time and variance for activity B.
Note that the expected time does not equal the most likely time.
These will only be the same only when the most likely time is
equidistant from the optimistic and pessimistic times.

61. 51
Example:
Solution
Expected completion time of the activity
Variance
= 1.78
Determine probabilities of project completion times
According to the Central Limit theorem, the expected

62. completion of the whole project
, which is the mean of the normal distribution.
Assume that the activities times are independent, the variance
of the completion time of the whole project
Determine probabilities of project completion times
Let D denote the expected project completion time, 6 weeks for
example.
Using z-transformation,

63. z is the # of standard deviations to the left or right of zero in
the standard normal distribution.
Using the z value, we then find the corresponding probability in
Appendix I of the textbook. That probability is the probability
of the project being completed in D amount of time.
Example: Determine Probability
Questions: What is the probability of completing the project in
35 weeks? Detailed solution is available in the doc “In-class
Examples”.

64. Outline
Project Management
What is Project Management?
Three types of projects
Work Breakdown Structure (WBS)
Project Management Techniques: PERT and CPM
Cost-Time Trade-Offs and Project Crashing
A Critique of PERT and CPM
56
Project Crashing
Basic assumption: There is a relationship between activity
completion time and project cost.

65. Time cost models: Determine the optimum point in time-cost
tradeoffs
Activity direct costs: costs associated with expediting activities.
Project indirect costs: costs associated with sustaining the
project.
Procedure for Project Crashing
Prepare a network diagram for the project
Determine the cost per unit of time to expedite each activity
Find out the critical path
Repeatedly shorten the critical path by crashing the least
expensive activity based on the costs to crash per period.
Stop until it is not profitable to crash.

66. Finding the minimum cost schedule
Crash only activities that are critical.
Crash from least expensive to most expensive.
Each activity can be crashed until
it reaches it’s maximum time reduction
it causes another path to also become critical
it is more expensive to crash than not to crash
Continue until no more activities should be crashed.
59

67. Example: Cost to crash per period
Please calculate the cost to crash per period for each of the
following activities.
Detailed solution available in the document “In-class
examples”.
Example: Project crash
This project, under normal conditions takes 20 days. Suppose
each day the project runs incurs an indirect project cost of
$1400 (overhead). What activities should be crashed if any?

68. Detailed solution available in the document “In-class
examples”.
Advantages of PERM/CRM
Especially useful when scheduling and controlling large
projects
Straightforward concept and not mathematically complex
Graphical networks help highlight relationships among project
activities
Critical path and slack time analyses help pinpoint activities
that need to be closely watched
Project documentation and graphics point out who is responsible
for various activities
Applicable to a wide variety of projects
Useful in monitoring not only schedules but costs as well

69. Disadvantages of PERM/CRM
Project activities have to be clearly defined, independent, and
stable in their relationships
Precedence relationships must be specified and networked
together
Time estimates tend to be subjective and are subject to fudging
by managers
There is an inherent danger of too much emphasis being placed
on the longest, or critical, path
Operations and Supply Chain Management
MGMT 3306

70. Lecture 01
Instructor: Dr. Yan Qin
Outline – Week 1
Course overview
Topics to be covered
Assessment items
Operations and Supply Chain Management (O&SCM)
What is OSCM
Services Vs. Goods
Efficiency Vs. Effectiveness
Productivity Measurement
Operations Strategies

71. Topics to cover in this course
Global Operations Strategy
Project Management
Quality Management
Statistical Process Control
Demand Management and Forecasting
Inventory Management
Location Strategy
Decision Making Tools
3
Grading scale
Your letter grade is determined using the grade distribution that
follows. You can calculate your percentage grade at any time in

72. the semester by dividing the points you have accrued by the
total points available up to that point. This percentage is then
matched to a letter grade.
A 90% or higher
B 80 to 89%
C 70 to 79%
D 60 to 69%
F Less than 60%
Course Assessment
Grade breakdown
Class Participation 10%
Individual Assignments 20%
Two Exams 70%
* Please refer to the tentative class schedule for the post and
due dates of each individual assignments.

73. Class participation
Class discussion will be held on the Forum (used to be called
Discussion Board in Vista 8) in the Learn 9 system. A set of 2-4
new questions will be posted each week with their end dates
stated. For each set of questions, you are expected to answer at
least one of the initial questions and reply to at least one of
your classmates responses for full credit.
Detailed netiquette rules you are expected to follow are
available on the Discussion Forum of Week 1.
Assignments and Exams
Individual Assignments
There are 4 individual assignments in total. Each assignment
consists of problem-solving questions and essay questions about
the topics covered in class. Each assignment accounts for 5% of

74. the final grade.
Two Exams
There will be two non-cumulative exams in total. Each accounts
for 35% of the final grade. The exams will be individual, timed,
and open-book/notes. Only multiple-choice questions will be
given on the exams.
Contact information
Course Website: https://www.uhv.edu/elearning/login.aspx
Email: [email protected] or via “Messages” function in Learn 9
My Office: Room 338, Brazos Hall, UHSSL
Office Hours: 4:00 pm – 5:00 pm on Tuesdays or by
appointment (You can either drop by my office in Brazos Hall
or meet me online at: https://meetonline.uhv.edu/su15oscm/)
Office Phone number: 832-842-2958
For technical questions about Learn 9, please email our online
support technicians at [email protected] .

75. What is OSCM
Operations include all the activities that relate to the creation of
good and services through the transformation of inputs to
outputs.
Operations Management (OM) refers to the management of
Operations activities to ensure the efficient utilization of all
kinds of resources in meeting customer expectations.
Supply Chain Management (SCM) deals with the management of
materials, information, and financial flows in a network
consisting of suppliers, manufacturers, distributors, and
customers.

76. 9
Example: OSCM Activities in a Commercial Bank
Commercial Bank
Operations:
Teller scheduling
Check Clearing
Collection
Transaction Processing
Facility Layout/design
Vault Operations
Maintenance
Security
Finance:
Investment
Securities
Real estate
Marketing:
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Accounting

77. Auditing
Trust Department
10
Example: OSCM Activities in a Manufacturing Organization
Manufacturing
Operations:
Facilities
Construction; Maintenance
Production and Inventory Control
Quality assurance and control
Supply Chain Management
Product Design
Industrial Engineering
Efficient use of machine, space
Process analysis
Finance:
Disbursements/credits
Accounts receivable

78. Accounts payable
Funds Management
Capital requirements
Stock issue
Bond issue and recall
Marketing:
Sales promotion
Advertising
Sales
Market research
11
OM’s Transformation Role
12
Inputs are transformed into Goods and Services via OSCM
activities.

79. Differences between Services and GoodsAttributes of
GoodsAttributes of ServicesTangible productIntangible
productProduct can be resold.Reselling a service is
unusual.Product can be inventoried.Many services cannot be
inventoried.Some aspects of quality are measurable.Many
aspects of quality are difficult to measure.Selling is distinct
from production.Selling is often a part of the service.Product is
transportable.Provider, not product, is often transportable.Site
of facility is important for cost.Site of facility is important for
customer contact.Often easy to automate.Service is often
difficult to automate.
13

80. Goods – Services Continuum
In reality, almost all services and goods are a mixture of a
service and a tangible product.
14
“We need to have things done efficiently and effectively!” said
your supervisor one day. But what does this mean?

81. Efficient Vs. Effective Operations
Efficiency: Doing something at the lowest possible cost.
Effectiveness: Doing the right things to create the most value
for the company.
Now you know that 4 situations can happen to you:
Efficient but Ineffective
Inefficient but Effective
Efficient and Effective
Inefficient and Ineffective

82. Efficient Vs. Effective Operations
From: http://optimaltraining.typepad.com/blog/effectiveness/
17
The 10 major OM decisionsTen Decision AreasSample
IssuesDesign of goods and servicesWhat good or service should
we offer?Managing quality How do we define the
quality?Process and capacityWhat process and what capacity
will these products require?Location strategyWhere should we
put the facilities?Layout strategyHow should we arrange the

83. facilities?Human resources and job designHow do we provide a
reasonable work environment?Supply chain managementShould
we make or buy this component?Inventory, material
requirements planning, and JITHow much inventory of item
should we have? When do we reorder?Intermediate and short-
term schedulingAre we better off keeping people on the payroll
during slowdowns?MaintenanceWho is responsible for
maintenance?
18
Productivity Measures
Productivity is a measure of efficiency.
It shows how well a country, industry, or business unit is using
its resources (or factors of production).
Formula:
Productivity = outputs / inputs

84. Three types of productivity measures
There are three types of productivity measures:
Partial: Exactly one input is considered in measuring
productivity
Multifactor: More than one input but not all inputs are included
when measuring productivity.
Total: All the inputs are included when measuring productivity.
Note that when one than one input is used to calculate
productivity, the inputs should be measured by the same unit.
(More details will be provided in the following.)
Example: Partial measures
According to the 2006 edition of the Harbour Report on North
American auto-factory productivity

85. GM : 33.19 labor hrs to build 1 vehicle
Honda: 41 minutes less than GM
Nissan: 500 autos with 14,230 labor hrs
Question 1: If GM’s labor productivity in year 2007 was .029
vehicles/ hr, what was GM’s change in labor productivity?
Question 2: How many hours did it take to build a vehicle at
GM in year 2007?
Labor, capital, materials, energy…
21
Example: Question 1
Answer:
GM’s labor productivity in year 2006 = output / input
= 1/ 33.19
= 0.03 vehicles/hr
GM’s labor productivity in year 2007 = 0.029 (given)
Change in labor productivity = 0.029 -0.03

86. = - 0.001
Example: Question 2
Answer:
GM’s labor productivity in year 2007 = 0.029 vehicle/hr (given)
The number of labor hours it took to produce a vehicle in year
2007 =
Example: Multi-factor measures
Suppose an automaker shows the following results:

87. Output : 500,000 vehicles
Labor = 29.4 hrs/ vehicle at $47/hr
O/H Charge = $327 per Labor hour
Material Cost = $6.5 Billion
Please calculate the multifactor productivity for labor and
material together.
24
Example: