NORTH SOUTH UNIVERSITY

BUS 650 | OPERATION MANAGEMENT

SECTION – 2 | SPRING 2020
FINAL ASSIGNMENT

SUBMITTED TO
Dr. A.K.M. Masud
Professor
School of Business and Economics
North South University

SUBMITTED BY
NAME ID

TAWSIF-UR-RAHMAN CHOUDHURY 1825278060

DATE OF SUBMISSION: 4th JUNE, 2020

 LETTER OF TRANSMITTAL

4th June, 2020

Dr. A.K.M. Masud

Professor
School of Business and Economics
North South University

Subject: Submission of report titled “Final Assignment”

Dear Sir,
With due respect, I would like to submit this report titled “Final Assignment” prepared as a partial
requirement for the course “BUS 650: Operation Management” of North South University’s
Masters of Business Administration degree programme.

I hope that this report has been comprehensive enough to achieve the aims and objectives.

Lastly, I sincerely wish that the report fulfils the relevant requirement and gets your acceptance.

Sincerely Yours,
Tawsif-Ur-Rahman Choudhury
1825278060

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 ACKNOWLEDGEMENT

I would like to express my deepest appreciation to all those who provided me the possibility to
complete this report. A special gratitude I give to our faculty, Dr. A.K.M. Masud, whose
contribution in stimulating suggestions and encouragement, helped me to coordinate my project
especially in writing this report.

Furthermore, a special thanks goes to my classmates for their continuous support which helped me
to create and complete this report.

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Table of Contents
1. What is the EOQ and what is the lowest total cost? ................................................................ 6
2. What is the annual cost of holding inventory at the EOQ and the annual cost of ordering
inventory at the EOQ? .................................................................................................................... 7
3. How much does the total cost increase if the store manager orders twice as many bird feeders
as the EOQ? How much the total cost increase if the store manager orders half as many bird feeders
as the EOQ? .................................................................................................................................... 7
4. What happens to the EOQ and the total cost when the demand is doubled? What happens to
the EOQ and the total cost when unit price is doubled? ................................................................. 8
5. What do you mean by ABC analysis? Discuss the practical implication of ABC analysis in
any factory operation. ................................................................................................................... 10
6. Define BOM and Lead time with suitable example. ............................................................. 10
7. What do you mean by MRP? How does it work in practical situation? ................................ 11
8. What do you mean by Supplies Inventory and Work in Process inventory? ........................ 12
9. What are the items included in Holding cost and Ordering Cost? ........................................ 12
10. What are the significance of Re-order point? .................................................................... 12
11. Explain the benefits of Two Bin System over One Bin System. ....................................... 13
12. Why a project is called Complex? Explain briefly. ........................................................... 14
13. What are the major characteristics of Project? Explain briefly. ........................................ 14
14. Explain the project life cycle briefly. ................................................................................. 15
15. What are the activities involved in different stages of Project? Explain. .......................... 16
15.1. Initiation Phase ........................................................................................................... 16
15.2. Planning Phase............................................................................................................ 16
15.3. Implementation (Execution) Phase ............................................................................. 16
15.4. Closing Phase ............................................................................................................. 17
16. What do you understand by critical path?.......................................................................... 17
17. What are the necessity of knowing the Early Start(ES)/Early Finish(EF) and Late
Start(LS)/Late Finish(LF) for each of the activities of Project. .................................................... 17
18. What are the priority rules for job sequencing? Why do the employers use priority rules for
sequencing n/1 problem? Explain. ................................................................................................ 19
19. Discuss the conditions of n/2 problem with suitable example. Do you think that we can have
multiple solution in case of certain n/2 problem? Explain such case. .......................................... 20
20. Define n/n problem in case of machine, shop and contractor. Also mention the conditions
of n/n problem. .............................................................................................................................. 22
21. The SOT rule provides an optimal solution in number of evaluation criteria. Should the
manager of a bank use the SOT rule as a priority rule? Why? ..................................................... 24

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22. Brown and Brown Electronics manufactures a line of digital audiotape (DAT) players.
While there are differences among the various products, there are a number of common parts
within each player. Prepare a MRP schedule to satisfy demand (Use the supplied sheet) ........... 24
23. There are following seven jobs and they must pass through Machine 1 and Machine 2.
Operating time for both the machines is shown below for each of the job. ................................. 26
23.1. Schedule (job sequence and show the arrangement in diagram for machine 1 & 2) the
seven jobs through two machines in sequence to minimize the flow time using Johnson’s rule.
26
23.2. Find the job completion time. ..................................................................................... 27
23.3. Find the slack time or idle time for machine 1 & 2, separately. ................................. 27

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1. What is the EOQ and what is the lowest total cost?
Economic Order Quantity (EOQ) is a measurement used in the area of Operations, Logistics, and
Supply Management to determine the volume and frequency of orders required to meet a given
level of demand while minimizing the cost per order. The Economic Order Quantity helps
companies minimize the cost of ordering and holding inventory. The cost of ordering inventory
falls with the increase in ordering volume due to purchasing on economies of scale. However, as
the size of inventory grows, the cost of holding the inventory rises. EOQ is the exact point that
minimizes both of these inversely related costs.
D= Annual Demand
2 ×𝐷 ×𝑂
𝐸𝑂𝑄 = √ O= Cost per order
𝐶
C= Annual Carrying cost per unit

The graphical representation of the economic order quantity is shown below:

Figure 1. EOQ

The Economic Order Quantity (EOQ) formula is calculated by minimizing the total cost per order
by setting the first-order derivative to zero. Total Costs is the sum of inventory acquisition cost,
ordering cost, and holding cost.
𝐷 𝑄
𝑇𝐶 = 𝐷𝐶 + 𝑆+ 𝐻
𝑄 2
The key notations in understanding the TC formula are as follows:
TC = Total cost R = Reorder point
D = Demand L = Lead time
C = Cost per unit H = Annual holding and storage cost per unit
of inventory
Q = Order quantity
S = Cost of placing an order or setup cost

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And the lowest total cost is the rate of change of total cost with respect to order quantity is 0.
𝑑(𝑇𝐶)
=0
𝑑(𝑄)

2. What is the annual cost of holding inventory at the EOQ and the annual cost of ordering
inventory at the EOQ?
Holding cost is the cost of a holding of inventory in storage. It is the direct cost that needs to be
calculated to find the best opportunity whether to store inventory or instead of it invest it
somewhere else. Assuming demand to be constant.
H= Holding cost
𝐻 =𝑖 ×𝑐 I= Carrying cost
C= Unit cost

Annual holding cost of holding inventory is the sum product of volume per order and holding cost
which can be written as.
𝑄 ×𝐻
𝐴𝑛𝑛𝑢𝑎𝑙 𝐻𝑜𝑙𝑑𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 =
2
Ordering cost is the cost of placing an order to the supplier for inventory. The number of orders is
calculated by the annual quantity demanded divided by volume per order.
𝐷 D = Annual quantity demanded
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 =
𝑄
Q = Volume per order

An annual ordering cost of ordering inventory is the number of orders multiply by ordering costs.
𝐷 ×𝑆 S = Ordering cost
𝐴𝑛𝑛𝑢𝑎𝑙 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 =
𝑄

3. How much does the total cost increase if the store manager orders twice as many bird
feeders as the EOQ? How much the total cost increase if the store manager orders half
as many bird feeders as the EOQ?
Let’s Assume,
Annual Demand = 2,000 units
Days per year considered in average daily demand = 365
Cost to place an order = $20
Holding cost per unit per year = $3.50

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Lead time = 7 days
Cost per unit = $10

To determine the Economic Order quantity,

2𝐷𝑆 2(2000)(20)
𝑄𝑂𝑃𝑇 = √ = √ = 151 𝑈𝑛𝑖𝑡𝑠
𝐻 3.50

Now, we know that the total cost formula is:

𝐷 𝑄
𝑇𝐶 = 𝐷𝐶 + 𝑆+ 𝐻
𝑄 2
2000 151
𝑇𝐶 = (2000 × 10) + × 20 + × 3.50
151 2

𝑇𝐶 = 20290
If the store manager orders twice as many bird feeders as the EOQ, then the order quantity
will be:
Q = 151 Units (at EOQ) X 2 = 302
Then the total cost will be:
2000 302
𝑇𝐶 = (2000 × 10) + × 20 + × 3.50
302 2
𝑇𝐶 = 20660
If the store manager orders half as many bird feeders as the EOQ, then the order quantity
will be:
Q = 151 Units (at EOQ)/2 = 75.5
Then the total cost will be:
2000 75.5
𝑇𝐶 = (2000 × 10) + × 20 + × 3.50
75.5 2
𝑇𝐶 = 20661

4. What happens to the EOQ and the total cost when the demand is doubled? What happens
to the EOQ and the total cost when unit price is doubled?
If we consider the previous example,
Annual Demand = 2,000 units

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Days per year considered in average daily demand = 365
Cost to place an order = $20
Holding cost per unit per year = $3.50
Lead time = 7 days
Cost per unit = $10

To determine the Economic Order quantity when demand is doubled, D is (2000 X 2) = 4000
So,
2𝐷𝑆 2(4000)(20)
𝑄𝑂𝑃𝑇 = √ = √ = 213 𝑈𝑛𝑖𝑡𝑠
𝐻 3.50

Now, we know that the total cost formula is:

𝐷 𝑄
𝑇𝐶 = 𝐷𝐶 + 𝑆+ 𝐻
𝑄 2
4000 213
𝑇𝐶 = (4000 × 10) + × 20 + × 3.50
213 2

𝑇𝐶 = 40748

Therefore, if demand doubles, Economic order quantity rises to 213 units from 151 units. Also
total cost increase to $40,748 from $20,290
To determine the Economic Order quantity when unit price is doubled, C is (10 X 2) = $20
So, there will be no changes in EOQ. thus

2𝐷𝑆 2(2000)(20)
𝑄𝑂𝑃𝑇 = √ = √ = 151 𝑈𝑛𝑖𝑡𝑠
𝐻 3.50

Now, we know that the total cost formula is:

𝐷 𝑄
𝑇𝐶 = 𝐷𝐶 + 𝑆+ 𝐻
𝑄 2
2000 151
𝑇𝐶 = (2000 × 20) + × 20 + × 3.50
151 2

𝑇𝐶 = 40529

Therefore, if unit price doubles, Economic order quantity remains the same which is 151 units but
the total cost increase to $40,529 from $20,290

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5. What do you mean by ABC analysis? Discuss the practical implication of ABC analysis
in any factory operation.
ABC analysis is an inventory categorization method used as a crude prioritization mechanism to
concentrate efforts and resources on the items that matter the most for the company. This method
is grounded in the empirical observation that a small fraction of the items or SKUs typically
account for a large portion of the business. Before perpetual inventory systems became prevalent,
ABC analysis was used to reduce the amount of clerical operations associated with inventory
management. The ABC analysis is used to support mundane inventory-related decisions, such as
passing purchase orders to suppliers.
Mr. Karim has a business of pants, and over time, his business has achieved tremendous success.
Mr. Karim, in search for varieties and additions to her pant inventory, has filled in 180 types of
pant instead of just 50 types. He now realizes that this business is seasonal, and he has already
invested a lot. After thorough research on how the problem mentioned above can be streamlined,
Mr. Karim implemented the ABC inventory categorization in his business model. He was finally
able to allow his business to visualize those areas wherein more profit was expected.
Now, as Mr. Karim already had too many options to organize into three categories: Category A,
B, and C, depending on their selling ratio, price, demand, etc.
Category A – The pants that fall under this category are the ones that are most important to the
company. They can either be the ones that are highly in demand, the ones that are generating the
most revenue, or the ones falling under the hottest trend for the season.
Category B – These pants are essential to the company, but not as much as the ones in category A.
A smaller market or lesser comparative demand are some of the reasons. For example, Summer
pants are mostly sold during the season and not very much before or after that. But yes, during the
seasons, the sales do go up. Mr. Karim can neither neglect such pants, nor can he make much profit
when not in season. Hence, category B.
Category C – This category includes the products that are neither in category A nor category B.
Mr. Karim doesn’t wish to put in more effort to sell off these pants as they are not of high value to
the company. Odd sizing, color combinations, patterns can be the possible reasons for Mr. Karim
to put these sweaters in category C.

6. Define BOM and Lead time with suitable example.

A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies,
subassemblies, parts and components, as well as the quantities of each, needed to manufacture a
product.
In a nutshell, it is the complete list of all the items that are required to build a product. A BOM is
sometimes also referred to as a product structure, assembly component list or production recipe
(in process manufacturing industries).
Take, for example, a bicycle manufacturer that wants to build 1,000 bicycles. A bill of materials
for a bicycle will include all the parts that make up the bicycle such as seats, frames, brakes,

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handlebars, wheels, tires, chains, pedals and cranksets, including the quantities required of each
component and their cost.
• A well-defined BOM helps companies:
• Plan purchases of raw materials
• Estimate material costs
• Gain inventory control
• Track and plan material requirements
• Maintain accurate records
• Ensure supply robustness and reduce waste

Lead time on the other hand is one of the crucial part of managing a manufacturing business or
any business that involves waiting for supplies or products to arrive. Generally, the lower the lead
time, the more flexible a company is and the faster it can respond to changes in trends. However,
shorter lead times can cost more money if the buyer has to pay for overtime, expedited shipping
costs, or other rush charges. This in turn makes it difficult to say whether shortening lead time will
increase profits, though it usually will increase customer satisfaction.
For example, let's say Company XYZ makes and sells widgets. It has a customer, ABC Company,
that wants to buy 10,000 widgets to put in its retail stores in October for the Christmas season.It
takes two weeks to get the widget parts and a week to assemble 10,000 units, so Company XYZ
has a lead time of about a month. That means that it must get the order from ABC company no
later than September 1 in order to make the delivery on time.

7. What do you mean by MRP? How does it work in practical situation?

Material requirements planning (MRP) is a planning and control system for inventory, production,
and scheduling. MRP converts the master schedule of production into a detailed schedule, so that
you can purchase raw materials and components. Used mostly in the manufacturing and fabrication
industries, this system is a push type of inventory control, meaning that organizations use
forecasting to determine the customer demand for products. The manufacturing or fabrication
company will forecast the amount and type of products they will purchase, along with the quantity
of materials to produce them. They then push the products to the consumers. This contrasts with a
pull system, where the customer first places an order. The main disadvantage of a push system is
its vulnerability when sales vary. In this scenario, the forecasts become inaccurate, which for
manufacturing, cause either a shortage of inventory or an excess of inventory that requires storage.
MRP begins by compiling a Bill of Materials (BOM) for each end product or component of
interest. This is a listing of the components and quantities that are needed to manufacture the end
product or component. Theoretically, the compilation of BOMs continues recursively,
enumerating the subcomponents that are needed to manufacture each component, until only raw
materials appear in the generated BOMs. In practice, a manufacturer may prefer to extend the
BOM enumeration for only a specified number of levels and to assume that components and/or
raw materials beneath that level are available on demand.

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Next, MRP requires information on the lead times associated with each manufacturing or assembly
procedure that is required to produce the components and end products. Lead time is the time
required to assemble or manufacture the needed components into the end product (or higher-level
component), and thus is the time elapsed between the point at which all needed components are
present and the end of assembly or manufacturing. These lead times may be compiled per unit of
each component/product or may be based on predetermined batch sizes.

8. What do you mean by Supplies Inventory and Work in Process inventory?

Supplies inventory is regular use product or day to day usage goods in an organization like pen,
pencil, paper, printer toner etc. Whereas work in process inventory represents goods which are
no longer salable as raw materials, but not yet salable as finished goods.

9. What are the items included in Holding cost and Ordering Cost?
Holding Cost: This broad category includes the costs for storage facilities, handling, insurance,
pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital. High
holding costs tend to favor low inventory levels and replenishment.
Ordering Cost: This cost refers to the managerial and clerical costs to prepare the purchase and
production order. Ordering cost include all the details, such as LC cost, Newspaper notice cost,
Postage cost, Phone calls, Labor cost, Transportation cost, counting items and calculating order
quantities. The cost associated with maintaining the systems needed to track orders are also
included in ordering cost. Larger the order size lower the ordering cost.

10. What are the significance of Re-order point?

A reorder point (ROP) is the minimum unit quantity that a business should have in available
inventory before they need to reorder more product. The formula to calculate reorder point is the
sum of lead time demand and safety stock in days.
𝑅𝑒𝑜𝑟𝑑𝑒𝑟 𝑃𝑜𝑖𝑛𝑡 = (𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐷𝑎𝑖𝑙𝑦 𝑈𝑠𝑎𝑔𝑒 × 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐿𝑒𝑎𝑑 𝑇𝑖𝑚𝑒 𝑖𝑛 𝐷𝑎𝑦𝑠) + 𝑆𝑎𝑓𝑒𝑡𝑦 𝑆𝑡𝑜𝑐𝑘
The key notations in understanding the TC formula are as follows:

• Average Lead Time is the average number of days it takes between the moment an order
is placed and when the inventory is received from the supplier and made available for
consumption.
• Average Usage is the average rate of consumption of inventory per day
• Safety Stock is the additional inventory necessary to reduce the risk of a stockout in case
of a delay in the order delivery (i.e. due to higher than average lead time) or a higher than
average inventory usage.

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Reorder points ensure that you don’t fall behind on your next batch of inventory. With an
accurate reorder point for each SKU, you’ll always have enough stock on hand to satisfy
customer demand — without tying up excess capital in inventory.
Re-order also help businesses by:
• Minimizing costs
• Minimizing stockouts
• Better forecasting

11. Explain the benefits of Two Bin System over One Bin System.
In one bin inventory system involves periodic replenishment no matter how few are needed. At
fixed periods, the inventory is brought up to its predetermined maximum level. The one bin is
always replenished and it therefore differs from the optional replenishment system, which only
reorder when the inventory used is greater than some minimum amount.

In two Bin Inventory system, items are used from one bin, and the second bin provides an amount
larger enough to ensure that the stock can be replenished. Two-bin inventory control is a system
used to determine when items or materials used in production should be replenished. When items
in the first bin have been depleted, an order is placed to refill or replace them. The second bin is
then supposed to have enough items to last until the order for the first bin arrives. In short, the first
bin has a minimum of working stock and the second bin keeps reserve stock or remaining material.

Effectively managing stock levels is one of the biggest challenges that companies face. Not having
enough inventory can result in missing out on sales opportunities and losing out to competitors.
Holding too much stock, on the other hand, increases the possibility of damage, spoilage, theft and
falling victim to shifts in demand. It also means higher storage costs and delays recouping money
from purchased goods to reinvest in the business.

The advantage of two-bin inventory control system over one-bin system is that it ensures
companies can reduce the risks and always have, more or less, the right level of stock to meet
demand without overdoing it.

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12. Why a project is called Complex? Explain briefly.
Complex projects are projects that are characterized as having many different social and technical
elements on many different levels that are interconnected and interdependent. In contrast to
simpler projects that are standardized, well-defined endeavors within predictable and stable
environments, complex projects typically involve a high degree of uncertainty in defining end
objectives, they often take place within a changing environment and may involve the input of many
diverse stakeholders.
One example of complex project might be trying to improve the standard of living within a
particularly disadvantaged area of a city. We are dealing with many diverse elements from crime
prevention to education to public services, infrastructure, social workers and so on, multiple
stakeholders who have disparate opinions about the current state of the system and its desired
future state. Added to this, the neighborhood represents a unique social, cultural and economic mix
that would reject any standardized process or procedure for altering it. The environment within
which the project takes place may be dynamic and volatile, a financial crash may occur within the
broader economy or there may be a major change in the political regime. Lastly, we are dealing
with a whole system. Optimizing any component in isolation would be of limited value in
achieving our desired outcome. We would need to work across traditional boundaries creating
synergies to tackle interdisciplinary problems from different dimensions.

13. What are the major characteristics of Project? Explain briefly.

A project is defined as a piece of work that is planned for implementation within current business
environment. The major characteristics of projects are given below:
• A single definable purpose, end-item or result. This is usually specified in terms of cost,
schedule and performance requirements.
• Every project is unique. It requires the doing of something different, something that was
not done previously. Even in what are often called “routine” projects such as home
construction, the variables such as terrain, access, zoning laws, labour market, public
services and local utilities make each project different. A project is a one-time, once-off
activity, never to be repeated exactly the same way again.
• Projects are temporary activities. A project is an ad hoc organization of staff, material,
equipment and facilities that is put together to accomplish a goal. This goal is within a
specific time-frame. Once the goal is achieved, the organization created for it is
disbanded or sometimes it is reconstituted to begin work on a new goal (project).
• Projects cut across organizational lines. Projects always cut across the regular
organizational lines and structures within a firm. They do this because the project needs
to draw from the skills and the talents of multiple professions and departments within the
firm and sometimes even from other organizations. The complexity of advanced
technology often leads to additional project difficulties, as they create task
interdependencies that may introduce new and unique problems.
• Projects involve unfamiliarity. Because a project differs from what was previously done,
it also involves unfamiliarity. And oft time a project also encompasses new technology

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 and, for the organization/firm undertaking the project, these bring into play significant
elements of uncertainty and risk.
• The organization usually has something at stake when undertaking a project. The unique
project “activity” may call for special scrutiny or effort because failure would jeopardize
the organization/firm or its goals.

A project is the process of working to achieve a goal. During the process, projects pass through
several distinct phases, which form and are called the project life cycle. The tasks, people,
organizations, and other resources will change as the project moves from one phase to the next.
The organizational structure and the resource expenditures build with each succeeding phase;
peak; and then decline as the project nears completion.

14. Explain the project life cycle briefly.

Every project has a beginning, a middle period during which activities move the project
toward completion, and an ending (either successful or unsuccessful). A standard
project typically has the following four major phases (each with its own agenda of tasks
and issues): initiation, planning, implementation, and closure. Taken together, these
phases represent the path a project takes from the beginning to its end and are generally
referred to as the project “life cycle.”

Figure 2. Project Life Cycle

The figure show the fours phases in a project life cycle and each phase needs to be completed
before moving into the next one.

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15. What are the activities involved in different stages of Project? Explain.
The projects have 4 stages and the activities are discussed in the following sections.
15.1. Initiation Phase
During the first of these phases, the initiation phase, the project objective or need is identified; this
can be a business problem or opportunity. An appropriate response to the need is documented in a
business case with recommended solution options. A feasibility study is conducted to investigate
whether each option addresses the project objective and a final recommended solution is
determined. Issues of feasibility (“can we do the project?”) and justification (“should we do the
project?”) are addressed.
Once the recommended solution is approved, a project is initiated to deliver the approved solution
and a project manager is appointed. The major deliverables and the participating work groups are
identified, and the project team begins to take shape. Approval is then sought by the project
manager to move onto the detailed planning phase.
15.2. Planning Phase
The next phase, the planning phase, is where the project solution is further developed in as much
detail as possible and the steps necessary to meet the project’s objective are planned. In this step,
the team identifies all of the work to be done. The project’s tasks and resource requirements are
identified, along with the strategy for producing them. This is also referred to as “scope
management.” A project plan is created outlining the activities, tasks, dependencies, and
timeframes. The project manager coordinates the preparation of a project budget by providing cost
estimates for the labour, equipment, and materials costs. The budget is used to monitor and control
cost expenditures during project implementation.
Once the project team has identified the work, prepared the schedule, and estimated the costs, the
three fundamental components of the planning process are complete. This is an excellent time to
identify and try to deal with anything that might pose a threat to the successful completion of the
project. This is called risk management. In risk management, “high-threat” potential problems are
identified along with the action that is to be taken on each high-threat potential problem, either to
reduce the probability that the problem will occur or to reduce the impact on the project if it does
occur. This is also a good time to identify all project stakeholders and establish a communication
plan describing the information needed and the delivery method to be used to keep the stakeholders
informed.
Finally, you will want to document a quality plan, providing quality targets, assurance, and control
measures, along with an acceptance plan, listing the criteria to be met to gain customer acceptance.
At this point, the project would have been planned in detail and is ready to be executed.
15.3. Implementation (Execution) Phase
During the third phase, the implementation phase, the project plan is put into motion and the work
of the project is performed. It is important to maintain control and communicate as needed during
implementation. Progress is continuously monitored and appropriate adjustments are made and
recorded as variances from the original plan. In any project, a project manager spends most of the
time in this step. During project implementation, people are carrying out the tasks, and progress
information is being reported through regular team meetings. The project manager uses this

16
information to maintain control over the direction of the project by comparing the progress reports
with the project plan to measure the performance of the project activities and take corrective action
as needed. The first course of action should always be to bring the project back on course (i.e., to
return it to the original plan). If that cannot happen, the team should record variations from the
original plan and record and publish modifications to the plan. Throughout this step, project
sponsors and other key stakeholders should be kept informed of the project’s status according to
the agreed-on frequency and format of communication. The plan should be updated and published
on a regular basis.
Status reports should always emphasize the anticipated end point in terms of cost, schedule, and
quality of deliverables. Each project deliverable produced should be reviewed for quality and
measured against the acceptance criteria. Once all of the deliverables have been produced and the
customer has accepted the final solution, the project is ready for closure.

15.4. Closing Phase

During the final closure, or completion phase, the emphasis is on releasing the final deliverables
to the customer, handing over project documentation to the business, terminating supplier
contracts, releasing project resources, and communicating the closure of the project to all
stakeholders. The last remaining step is to conduct lessons-learned studies to examine what went
well and what didn’t. Through this type of analysis, the wisdom of experience is transferred back
to the project organization, which will help future project teams.

16. What do you understand by critical path?

The critical path is the longest sequence of activities in a project plan which must be completed on
time for the project to complete on due date. An activity on the critical path cannot be started until
its predecessor activity is complete; if it is delayed for a day, the entire project will be delayed for
a day unless the activity following the delayed activity is completed a day earlier. The critical path
is very useful in helping to manage any project. When the critical path has been identified, it can
clearly be seen where effort cannot be compromised. If any of the activities on the critical path
change, the end date of the project will be affected.

17. What are the necessity of knowing the Early Start(ES)/Early Finish(EF) and Late
Start(LS)/Late Finish(LF) for each of the activities of Project.
The workers needed to complete the project needs to be broken down and all activities need to be
defined. Once we know how long each activity will take, we can use this information to understand

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the duration of the project. A network schedule of activities needs to be completed. Each activity
within the schedule is represented as follows:

Early Start: The earliest time that an activity can start according to the logical constraints.

Early Finish: The earliest time that an activity can finish according to logical constraints.

Late Start: The latest time that an activity can start according to logical constraints and without
affecting the overall project duration.

Late Finish: The latest time that an activity can finish according to logical constraints and without
affecting the overall project duration.

In order to work out how long it will take to complete the sequenced work, we need to perform
what is known as a forward pass. The early start of the first activity is zero and the early finish is
calculated by adding the duration.

Early Start + Duration = Early Finish

This process is then carried through subsequent activities. Where an activity has two or more
preceding activities it is the latest time which is transferred.

The example shown indicates that the quickest we can carry out the work we have identified is 28
days. However, what we don’t know is which of the activities are critical and if we have movement
available (float) on any of the activities.

In order to establish the latest dates that an activity can commence without affecting the end date
a back pass is performed. The early finish of the last activity in the network is transferred to the
late finish. The duration is then subtracted from the late finish to obtain a late start. Where an

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activity has two or more succeeding activities, it is the earliest date that is transferred. This process
is repeated throughout the network until all late start and finish dates have been identified.

Late Finish – Duration = Late Start

Now that we have the early start and late start for each activity and have calculated the float
available, we can work out the critical path through the network. The critical path is the series of
activities within the network with zero total float. The critical path is shown in red in our example
given.

18. What are the priority rules for job sequencing? Why do the employers use priority rules
for sequencing n/1 problem? Explain.
Job sequencing rules determine the priority for processing jobs. They address scheduling problems
that generally lead to inefficient performance in assigning jobs and completing them. The priority
rules for job searching are discussed below:
• Earliest Due Date: Some shops sequence jobs by earliest due date. Sometimes called due
date assignment, it places the highest priority on processing jobs with the earliest due dates.
Job shop quality performance can be measured by the number of late jobs, the average
tardiness across late jobs or the average tardiness across all jobs.

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 • Longest Processing Time: The longest processing time approach to job sequencing
assigns the highest priority to jobs with the longest processing time. By scheduling the
longest job first, schedulers are able to reduce the number of outstanding long jobs at the
end of the job schedule. The completion time for the last jobs—which are among the
shortest in length—is also reduced.
• Shortest Processing Time: Another method of job sequencing based on job completion
time, the shortest processing time method assigns jobs with the shortest processing time
first. Like the LPT scheduling method, SPT requires an initial time estimation for each job.
SPT reduces average flow time for jobs, according to Kenneth R. Baker in "Management
Science."
• First-Come, First-Serve: Many shope employ the first-come, first-served job sequencing
method, which processes job orders in the order of their arrivel at the production center.
Arrival time is the determinative factor in this scheduling rule, which is also referred to as
first-in, first-out. It is sometimes described as the simplest job sequencing rule. For
example, unlike SPT and LPT scheduling methods, no time estimation is required for FCFS
scheduling.
• Preferred Customer Order:The preferred customer order approach prioritizes jobs from
preferred customers, and can be useful tool for building customer loyalty.

Employers use priority rules because it helps them to prioritize jobs as soon as the job arrives and
gives them a clear picture on which job to perform first which makes a significant impact by
reducing the least flow time and mean latesness.

19. Discuss the conditions of n/2 problem with suitable example. Do you think that we can
have multiple solution in case of certain n/2 problem? Explain such case.

To solve a n/2 problem we follow Johnson’s rule. That means n number of job was done by using
two machine. The conditions or steps of n/2 problem are shown below:

Step-1: List the operation time for each job on both machines.

Step-2: Select the shortest operating time.

Step-3: If the shortest time is for the first machine, do the job first; if it is for the second machine,
do the job last.

Step-4: Repeat step2 and 3 for each remaining job until the schedule is complete.

Let’s consider the following example:

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 Jobs Processing time on Processing time on
M1 M2
A 4 3
B 7 9
C 6 7
D 8 5

Applying the Johnson’s rule in this n/2 problem we get:

M1 M2
A
D
C
B

The job sequence is: C – B – D – A

6 13 21 25 30

M1
C B D A Ideal (5)
Ideal (6) A
C B D A
M2
D D A
6 13 22 27 30
2
All job completion time = 30 days A
B D
C
Ideal time for M1 = 5 days
A
Ideal time for M2 = 6 days D

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20. Define n/n problem in case of machine, shop and contractor. Also mention the conditions
of n/n problem.

M1 M2 M3 M4

J1 15 13 14 17

J2 11 12 15 13

J3 13 12 10 11

J4 15 17 14 16

Here we have four jobs (J1, J2, J3 and J4) also have four machine/shop/contactor (M1, M2, M3
and M4). Each job needs different time to completion by different machine. In case of different
machine/shop/contactor working cost also may different. We have to assign n jobs in n
machine/shop/contactor in such a way that our cost is minimize and also working days.
Now we will solve the above problem using Hungarian Model
Step #1: Select the minimum operating time/cost for each of the row and deduct the selected
minimum value from each of the elements of each row.

M1 M2 M3 M4

J1 2 0 1 4

J2 0 1 4 2

J3 3 2 0 1

J4 1 3 0 2

Step #2: Select the minimum operating time/cost for each of the column and deduct the selected
minimum value from each of the elements of each column.

M1 M2 M3 M4

J1 2 0 1 3

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 J2 0 1 4 1

J3 3 2 0 0

J4 1 3 0 1

Step #3: Draw minimum number of horizontal or vertical lines to cross all the zeroes in the matrix.

Step # 4: Assign the jobs.

Stopping rule: If the minimum number of horizontal or vertical line crossing all zeroes in the matrix
is equal to the number of jobs or variables then we have to stop and assign the jobs. But if it is less
we have to go for next step.

Assign the jobs:

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J1 - M2 - 13
J2 - M1 - 11
J4 - M3 - 14
J3 - M4 - 11
Total = 49

21. The SOT rule provides an optimal solution in number of evaluation criteria. Should the
manager of a bank use the SOT rule as a priority rule? Why?

The way SOT rule provides an optimal solution in number of evaluation criteria are discussed
below:
Shortest operating time assigns jobs with the shortest operating first. Similar to the longest
processing time scheduling method, shortest operating time requires a time estimation for each
job. Shortest operating time can effectively reduce average flow time for jobs. In shortest
operating time rule, the job with shortest processing or operating time is processed first or in simple
words jobs are processed in increasing order of their processing time. For example within a system
if there are three jobs with processing time of 5 minutes, 3 minutes and 8 minutes. Then the job
with 3 minutes will be processed first, job with 5 minutes second and so on. This creates problem
for long processing time jobs in which jobs gets delayed infinitely.

Even though Shortest operating time (SOT) rule provides optimum solution in number of
evaluation criteria, a bank manager may still not choose SOT instead the manager will prioritize
the First Come, First Serve (FCFS) rule for the customer service sequence.

22. Brown and Brown Electronics manufactures a line of digital audiotape (DAT) players.
While there are differences among the various products, there are a number of common
parts within each player. Prepare a MRP schedule to satisfy demand (Use the supplied
sheet)
A MRP schedule has been prepared below based on the demand of products A & B and demand
of spares components:

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 MRP Schedule
Week/Day
Item
1 2 3 4 5 6 7 8 9
Gross Requirement 500
On Hand = 30 30
A
Net Requirement 470
LT= 1
Order Receive 470
Order Release 470
Gross Requirement 1000
On Hand = 50 50
B
Net Requirement 950
LT= 2
Order Receive 950
Order Release 950
Gross Requirement 2170 470
On Hand = 75 75
C
Net Requirement 2095 470
LT= 1
Order Receive 2095 470
Order Release 2095 470
Gross Requirement 320 940 320
On Hand = 80 80
D
Net Requirement 240 940 320
LT= 2
Order Receive 240 940 320
Order Release 240 940 320
Gross Requirement 2180
On Hand = 100 100
E
Net Requirement 2080
LT= 1
Order Receive 2080
Order Release 2080
Gross Requirement 480 6070 1680
On Hand = 150 150
F
Net Requirement 330 6070 1680
LT= 1
Order Receive 330 6070 1680
Order Release 330 6070 1680
Gross Requirement 4190 940
On Hand = 40 40
G
Net Requirement 4150 940
LT= 1
Order Receive 4150 940
Order Release 4150 940
H Gross Requirement 4150 940
LT= 1 On Hand = 200 200

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 Net Requirement 3950 940
Order Receive 3950 940
Order Release 3950 940
Gross Requirement 660 12140 3360
On Hand = 300 300
I
Net Requirement 360 12140 3360
LT= 1
Order Receive 360 12140 3360
Order Release 360 12140 3360

23. There are following seven jobs and they must pass through Machine 1 and Machine 2.
Operating time for both the machines is shown below for each of the job.
Job Operations Operations
Time for Time for
Machine – 1 Machine – 2
A 9 6
B 8 5
C 7 7
D 6 3
E 1 2
F 2 6
G 4 7

23.1. Schedule (job sequence and show the arrangement in diagram for machine 1 & 2) the
seven jobs through two machines in sequence to minimize the flow time using Johnson’s
rule.

M1 M2
1
2
3
4
5

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 6
7

The job Sequence to minimize the flow time is: E – F – G – C – A – B – D A

23.2. Find the job completion time.

Total Job Completion time = 40 Days.

23.3. Find the slack time or idle time for machine 1 & 2, separately.

The Slack time or Idle time for machine 1 and 2 are given below:

Machine 1 = 3 Days.
Machine 2 = (1+2+1) = 4 Days.

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