Inventory Management

1
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.

2
Lecture
5
Project Management Chapter 17
3
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

4
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

5
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

6
Project Management

• What are the tools?
• Work breakdown structure
• Network diagram
• Gantt charts
• Risk management

7
Planning and Scheduling
8
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

9
Project Manager

• Responsible for

Work Quality Human Resources Time Communicat
ions Costs
10
Ethical Issues

• Temptation to understate costs
• Withhold information
• Misleading status reports
• Falsifying records
• Compromising workers safety
• Approving substandard work

11
Project Life Cycle
12
Work Breakdown Structure
13
PERT and CPM

• PERT Program Evaluation and Review Technique
• CPM 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

14
The Network Diagram

• Network (precedence) diagram
• Activity-on-arrow (AOA)
• Activity-on-node (AON)
• Activities
• consume resources and/or time
• Events
• points in time

15
Project Network Activity on Arrow
Figure 17.4
AOA
16
Project Network Activity on Node
Figure 17.4
AON
17
The Network Diagram (contd)

• Path
• 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
• Critical path
• The longest path determines expected project
  duration
• Critical activities
• Activities on the critical path
• Slack
• Allowable slippage for path the difference the
  length of path and the length of critical path

18
Network Conventions
19
Time Estimates

• Deterministic
• Time estimates that are fairly certain
• Probabilistic
• Estimates of times that allow for variation

20
Example 1
Figure 17.5
Deterministic time estimates
21
Example 1 Solution
22
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

23
Advantages of PERT

• Forces managers to organize
• Provides graphic display of activities
• Identifies
• Critical activities
• Slack activities

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Limitations of PERT

• Important activities may be omitted
• Precedence relationships may not be correct
• Estimates may include a fudge factor
• May focus solelyon critical path