MGT 301 Exam 2

chapters 3, 7, S7, 12, and 13

Project

-series of related tasks directed toward a major output.
-unique, temporary, and have defined goals, deadlines, and resource constraints

-require cross‑functional teams and special coordination

project examples

new product launch, building a house, wedding planning, semester‑long assignment

Critical path

- The longest time path through the project network.
-Determines minimum project duration.
-Any delay on a critical activity delays the entire project

slack

amount of time an activity can be delayed without delaying the project

critical time activites have _____ slack

no

Work breakdown structure (WBS) def

Breaks the project into manageable components

Work breakdown structure (WBS) levels

Project → Major tasks → Subtasks → Activities (work packages).

Work breakdown structure (WBS) is used for

planning, scheduling, budgeting, and assigning responsibility.

Network diagram

-Graphical representation of project activities and precedence relationships.

-Activity‑on‑Node (AON) AND Activity‑on‑Arrow (AOA).

Activity‑on‑Node (AON)

-uses nodes as activites

-most popular

Activity‑on‑Arrow (AOA)

-uses arrows as activities and nodes as events

-consume no time

PERT/CPM are network techniques developed in

1950s for complex project scheduling

PERT

uses three time estimates and handles uncertainty

CPM

uses one time estimate and assumes known activity durations

BOTH PERT AND CPM identify:

critical path, slack, and project duration

gantt chart

 -Bar chart showing activities over time.
-Useful for simple projects.
-Shows planned vs. actual progress.
-Does not show interdependencies.

process

ongoing, repetitive, and part of daily operations

What increases the need for project management?

time based competition and short production life cycles

5 steps to identify the critical path

1. Draw the network.
   2. Compute ES and EF using a forward pass.
   3. Compute LS and LF using a backward pass.
   4. Critical path = activities with zero slack.
   5. Determines project duration and bottlenecks.

crashing

-shortens project duration by adding resources to critical activities.
-Increases cost.
-Used when deadlines must be met.
-Only critical path activities should be crashed.

Crashing may create a new critical path.

true

unique projects are

new products or service introductions

poor scheduling may cause

delays and cost overruns

3 phases of project management

planning, scheduling, controlling

1st phase of project management

Planning: goal setting, defining the project, organizing the team

2nd phase of project management

Scheduling: linking people, money, and materials to activities

3rd phase of project management

Controlling: monitoring resources, costs, quality, budgets, and revising plans

Project manager responsibilities

Ensure activities finish in sequence and on time
Keep project within budget
Meet quality goals
Provide motivation, direction, and information

what are some ethical issues that arise to project managers?

gifts from contractors, pressure to alter reports, false time sheets, and quality compromises

what set of standards help project managers with ethics?

PMI

Gross requirements for people, supplies, and equipment are estimated during ….

planning

PERT/CPM are computerized.

true

what does project scheduling do?

Shows relationships among activities
Identifies precedence
Encourages realistic time and cost estimates
Identifies bottlenecks
Improves resource use

project control

 Monitors resources, costs, quality, and budgets.
Uses feedback loops to revise plans.
Software tools generate cost, labor, variance, and status reports.

Well‑defined projects

clear inputs, processes, outputs (example: buildings, roads).
Use waterfall approach

ill defined projects

 many unknowns (example: software, new tech).
Use agile approach with iterative work and frequent feedback

most projects fall

in between waterfall and agile

6 steps of PERT/CPM

 Define the project and WBS
Determine activity relationships
Draw the network
Assign time/cost estimates
Compute the critical path
Use the network to plan, schedule, monitor, control

critical path

Longest time path through the network.
Delays on critical activities delay the project.
Noncritical activities provide flexibility.

PERT uses ____ time estimates .

3

CPM uses ____ time estimates .

1

What do PERT/CPM answer?

completion time, critical activities, probability of meeting deadlines, and resource sufficiency

Network diagrams

Show activities and precedence

critical path determines

true duration

Earliest finish (EF)

-Earliest time an activity can finish

-top right

Latest start (LS)

-Latest time an activity can begin without delaying the project.

-bottom left

Latest finish (LF)

-Latest time an activity can finish without delaying the project.

-bottom right

Two‑pass process

Forward pass computes ES and EF.
Backward pass computes LS and LF.

Earliest start (ES)

-Earliest time an activity can begin after all predecessors finish.

-top left

if one predecessor, ES=

EF of predecessor

if multiple predecessors, ES=

max(EF of all predecessors)

Earliest Finish Time Rule

EF = ES + activity time

If one successor → LF =

LS of successor

If multiple successors → LF

= min(LS of all successors)

Latest Start Time Rule

LS = LF − activity time

Slack

how long an activity can be delayed without delaying the project

Total slack

Noncritical activities on the same path share slack

CPM ignores variability because it assumes _____ activity times.

fixed

activity times will vary due to

delays, weather, personnel issues, etc

PERT addresses variability using three time estimates

 Optimistic time (a)
Most likely time (m)
Pessimistic time (b)

PERT assumptions

 Activity times follow a beta distribution & are statistically independent.
Project completion times follow a normal distribution.

Project variance

Sum of variances of activities on the critical path.

Project standard deviation

Square root of project variance.

Reducing variability improves

reliability

Project crashing ________ project duration at the lowest possible cost.

shortens

Each activity has:

 Normal time and normal cost
Crash time and crash cost
Some activities cannot be shortened

Crashing requirements

 Activity must be crashable.
Crashing must reduce project duration.
Crash cost must be minimized.

Crash cost per period

Four steps in crashing

 Step 1: Compute crash cost per period.
Step 2: Identify current critical path(s).
Step 3:
If one critical path → crash cheapest activity on that path.
If multiple critical paths → crash one activity from each path at minimum combined cost.
Step 4: Update times and repeat until due date is met.

PERT/CPM advantages

 Concept is straightforward.
Graphical networks show relationships.
Critical path and slack highlight priorities.
Clarifies responsibility for each activity.
Applicable to many project types.
Useful for monitoring schedules and costs.

PERT/CPM limitations

Activities must be clearly defined and independent.
Precedence relationships must be known.
Time estimates may be subjective or biased.
Near‑critical paths may be ignored even though risky.

Process focus / intermittent / job shop

 Low volume, high variety.
Organized around specific activities or departments.
High flexibility, frequent changes, varied routing.
High variable cost, low equipment utilization

examples of Process focus / intermittent / job shop

welding, painting, bakery, hospital departments.

Repetitive focus / batch / assembly

 Mid‑volume, mid‑variety.
Classic assembly line using modules.
More structure, less flexibility than process focus.

examples of Repetitive focus / batch / assembly

automobiles, appliances, fast‑food assembly.

Product focus / continuous / line

High volume, low variety.
Organized around products.
Long, continuous production runs.
High fixed cost, low variable cost, high utilization

examples of Product focus / continuous / line

glass, paper, potato chips, lightbulbs.

Mass customization

 High volume, high variety.
Rapid, low‑cost production of unique customer desires.
Combines flexibility of process focus with efficiency of product focus.

examples of mass customization

Dell build‑to‑order, Toyota custom cars, digital textile design.

Design capacity

Maximum theoretical output of a system.

Effective capacity

Capacity a firm expects to achieve given maintenance, breaks, scheduling, etc.

utilization calculation

Actual output ÷ design capacity.

efficiency calculation

Actual output ÷ effective capacity

Economies of scale

Unit cost decreases as output increases.

Diseconomies of scale

Unit cost increases as output increases due to complexity, congestion, or management limits.

Process time

Time to complete one unit at a workstation.

Throughput time

 Total time a unit spends in the system.

Bottleneck time

Time of the slowest workstation; limits system capacity

process focus(Volume–Variety)

low volume, high variety

repetitive focus(Volume–Variety)

mid‑volume, mid‑variety

product focus(Volume–Variety)

high volume, low variety

mass customization(Volume–Variety)

high volume, high variety

Objective of process strategy

Transform resources into goods/services while meeting customer requirements within cost and managerial constraints

Product‑focused and repetitive processes have ____ unit costs at ____ volume and ____ utilization.

low, high, high

Process focus is best for ____‑volume differentiated products.

low

Mass customization requires strong design, scheduling, supply chain, and inventory capabilities

true

Crossover charts

 Compare total costs of different processes.
Show volume ranges where each process is cheapest.

Focused processes

 Specialization increases efficiency and reduces complexity.
Focus builds core competence and supports competitive advantage.

Equipment decisions consider

cost, cash flow, market stability, tolerances, maintenance, and flexibility

flexibility

response with little penalty in time, cost, or customer value.
comes from modular, movable, or digitally controlled equipment.
expensive but brings competitive advantage

Flowcharts

 Show movement of materials, products, or people.
Help with understanding, analysis, and communication