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Where
D = Annual demand for the product
C = Ordering costs per unit
H = Holding costs per unit as expressed by purchase price of the item times the carrying costs of maintaining the inventory
The re-order point (ROP) for the EOQ is calculated as follows:
ROP = D/Time
A few extra items of inventory called safety stock are used to ensure that the organization does not run short of stock. The EOQ
formula works well when inventory items are not dependent on one another and when demand and lead-time are constant.
Materials requirement planning
A more complicated inventory problem occurs with dependent demand inventory, The most common inventory control system used
for handling dependent inventory is materials requirement planning (MRP). MRP is dependent demand inventory planning and
involves the implementation of a control system that schedules the exact amount of all materials required to support the desired end
product. MRP is computer based and requires sophisticated calculations to coordinate information on inventory location, bills of
materials (a listing of all components including partially assembled pieces and basic parts that make up an end product), purchasing,
production planning, invoicing, and order entry specified in the master schedule. Inventory levels are based on past consumption and
are aimed at reducing inventory costs and keeping the production line supplied with the materials necessary to keep it running
smoothly.
Manufacturing planning and control
Manufacturing planning and control (MPC) systems enable the firm to move materials through the operation and schedule so that the
company satisfies customer needs at a minimal cost eg MRP II and JIT.
MRP II - a technique for managing inventory; it is a computer-based information system that integrates the production planning and
control activities of basic MRP systems with related financial, accounting, personnel, engineering and marketing information.
Just-in-time
Just-in-time (JIT) inventory planning is a system designed to reduce the level of an organisation's inventory to zero. Sometimes these
systems are referred to as stockless systems or zero inventory systems.
JIT is called a demand-pull system because each workstation produces its product only when the next workstation says it is ready to
receive more input. This is in contrast to the traditional batch-push system, in which parts are made in large, supposedly efficient
batches and pushed to the next operation on a fixed schedule, where they sit until used.
Quality management
Operations Managers are concerned with the quality of the output of their Operations system. This quality may be associated with the
reliability of the product or service, the conformity to regulations, the level of waste, the level of after sales service provided, the
design of the product, and the consistency of delivery of the product or service.
Quality Benchmarking
Quality benchmarks may be achieved by using one or more of the following strategies:
quality control (where the quality is monitored during the production or the service provision process).
quality assurance (where the organisation achieves certification that is dependent upon them achieving specified levels of
quality in the actual production of the good or service).
total quality management (where the organisation applies both quality control and quality assurance to their production or
provision processes)
Total Quality Management (TQM)
TQM aims to improve quality and productivity by striving to perfect the entire production process. TQM stresses coordination
between departments, especially product design, purchasing, sales and service so that all groups are working together. It is based
on promoting continuous improvement in the quality of all the processes involved.
Statistical Process Control (SPC)
One operations management technique for improving quality and productivity is statistical process control (SPC).
SPC is the application of statistical techniques to control work processes in order to detect production of defective items.
The steps involved in SPC include:
define the characteristics of a high quality output.
break down the various work activities into individual activities required to produce a high quality output.
have a standard for each work activity.
discuss specific performance expectations for each task with employees.
make check sheets and collect data for each task activity.
evaluate employee progress against standards at frequent intervals.
This process relies upon the 'PLAN-DO-ACT-CHECK' approach to production. This involves planning to achieve set standards of
performance and identifying areas to be improved, implementing these strategies, measuring performance and carrying out
corrective action.
MODULE 4 - PROJECT MANAGEMENT
CHAPTER 12 PROJECT MANAGEMENT OVERVIEW
Project Management
Project Management overview and definition
Projects are singular, but non-routine, events with precise objectives which must be achieved within a set timeframe. Projects are
broken into a set of activities designed to fulfil the stated objectives. Examples of projects include the building of a house, the holding
of an event like a party or even something as simple as completing a school assignment.
Project Management requires the organisation of people, equipment and procedures in an appropriate way to get a project
completed within a set timeframe and budget. A Project Manager is responsible for the coordination of all these resources in order to
achieve the project objectives.
The following need to be considered when planning a project:
Purpose and aim of the project.
Resources available both human and material.
Costing, human and time constraints.
The tasks, procedures or activities required to complete the project.
Project management techniques are used by organisations because they ensure that organisational objectives and system
objectives are being met in a timely, accurate, relevant and complete manner. They provide a way of controlling people, resources
and procedures, and clearly identify the tasks that must be completed and the desired completion time.
Project Management History
Even before the time of the Pyramids humankind has had to devise plans for completing set projects.
Project Management is not a new concept. Even in the time of the Ancient Egyptians a form of project management was needed to
coordinate the construction of the great pyramids. Modern project management tools were, however, not developed until the early
1900s with the creation of the GANTT chart method. Further refinement in project management tools came about in the 1950s with
the development of the Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). These three tools form
the basis for documenting and managing the progress of projects. All of these tools produce graphical representations of projects,
and all current project management software includes these components.
Interviews with Project Managers
Clarke Stevenson coordinated the development of a resource for international students at Monash University. He answered some
questions about his role as a Project Manager. The resource he created can be viewed at:
http://www.monash.edu.au/intoff/
Vanessa Duis, 29, works as a Project Manager coordinating CD-ROM and Internet content. She works to extremely tight deadlines
within a multimedia organization alongside a variety of developers, designers, film-makers, authors and editors. Read her comments
about how Project Management techniques are used within the multimedia industry.
CHAPTER 13 PROJECT MANAGEMENT CASE STUDY
Case Study: Mira, Muse of the Spheres and Musicale Musak
What would your life be like if you were employed as a Project Manager tomorrow? What could you expect if you were employed to
use information processing and management techniques within a company? Welcome to the world of Mira, Muse of the Spheres and
Musicale Musak where you will find out the answers to these questions and enter the high-flying world of information processing and
management.
CHAPTER 14 PROJECT MANAGEMENT METODOLOGY
Project Management Methodology
This Information Technology resource reviews the phases of Project Management. Begin by drawing some preliminary conclusions
about which phase is the most expensive. Why might this be the case? Which stage is least expensive? Use the graph below.
There are several distinct phases or steps involved with managing a project. There are many versions of the phases described.
Regardless of which version you read they will all encapsulate the following concepts:
Phase 1: Investigation
Phase 2: Planning and Design
Phase 3: Production
Phase 4: Monitoring and Evaluation
Phase 1: Investigation
Once a project is defined, further research is needed in order to determine whether or not it is worthwhile pursuing.
This phase:
Involves the initial commissioning of the project.
Involves the identification of the initial aim and goals.
Involves investigation into the possible ways the project could be completed.
Is undertaken by top level management or strategic planners.
This phase would provide a project brief to the project team or project manager.
Phase 2: Planning and Design
This phase is important as it provides the foundation for the following phases. The aim of this step is to ensure that the objectives can
and will be met within the set time and budgetary constraints.
This phase involves:
Defining the exact purpose of the project and clearly defining the objectives to be achieved.
Breaking the project into tasks or activities and defining the purpose of each.
Estimating the shortest and longest possible time required for each activity.
Identifying milestones and key time markers in the project that keep the project on schedule.
Determining the sequence of activities and any constraints affecting the sequence. For example, some tasks must be
completed before other ones can start, or particular resources might be required for the activity. This also includes:
o Deciding which activities should be completed before others can commence.
o Identifying activities that can be done simultaneously or must be done at the same time.
o Assigning resources, people, materials and equipment to activities.
o Estimating the cost of resources.
o Drawing up a calendar of events.
The deliverables or final output of this phase could include:
A project plan for management review
A GANTT chart
A PERT diagram, including a critical path, or a network diagram.
Phase 3: Production
During this phase the plan is put into operation. It ought to provide a completed project, ready to be 'handed over to' clients.
Alternatively, it may end in a full implementation, i.e. at the end of an internal organisational project.
This phase involves:
Providing the resources
Completing the activities
Monitoring, controlling and recording the progress of the project on the GANTT chart
Comparing the current progress to the planned schedule
Updating and refining the schedule as required
Monitoring resource use to ensure no budgetary blowout
Ensuring milestones and overall goals are met
Phase 4: Evaluation and Monitoring
As part of the evaluation and monitoring phase of Project Management the project team is decommissioned or reassigned new tasks.
The initial part of this phase is the transferal or hand over of the project. Of course this project may not always have a single product
as the final result. Either way, the objectives of the project at this point should be met.
Once the project is transferred to the client the project team is 'decommissioned', reassigned new tasks or placed into new project
teams. Some members of the group may be utilised in observing the full implementation of the project or in supporting or monitoring
its implementation.
It is also at this point the management will assess the success of the project. This assessment is based on the elements of efficiency
and effectiveness:
Quality: How well it has met the objectives? What is the final quality of the product?
Cost: Did the project stay within the budget specified and proposed use of resources?
Time: Did the project finish on or before the specified date? Was it the shortest possible time for the project?
Timeliness: Was the project completed in time for the information to be of use?
Accuracy: Are there any errors in the product?
Relevance: Does the project/product include only those elements required by the client?
Completeness: Does the client have everything they need in order to do their work and make their decisions?
Revision
Try the following Project Management revision activity to review what you have learned so far.
Test your understanding. Print out the following summary sheet then fill in the blank spaces to complete the document. Answers are
provided on page two.
A. Introduction to Project Management
Project Management requires the organization of three things: (1). , (2). and (3). . Project
managers are concerned with how to get a particular job done. The jobs, or projects, coordinated by project managers have set
activities that are required to meet stated (4). . The first documented Project Management techniques were in the early
1900s with the development of the (5). chart method. The principles of Project Management were refined further in the
1950s with the development of the (6). Path Method (CPM) and the Program (7). and (8).
Technique (PERT).
B. The Phases of Project Management
Project management is characterised by four specific stages. These distinct steps are: (1)., Planning and (2).,
(3). and, lastly, Monitoring and (4). . During the Investigation phase the initial (5). of the project
takes place and goals and (6) . are identified.At the end of this phase a project
(7) . is given to the project team or project manager. During the Planning and Design phase milestones and key time
markers are identified to keep the project on
(8) . . It is also important during this phase to break the project into tasks or activities and to define the (9).of
each. The Production phase should provide a (10).project, ready to be 'handed over to clients. In the final phase of
Project Management, the Evaluation and Monitoring phase, the (11). of the project is assessed. The project is assessed
based on (12) .and (13) .factors.
Answers
A. Introduction
(1) people
(2) equipment
(3) procedures
(4) objectives
(5) GANTT
(6) Critical
(7) Evaluation
(8) Review
B. The Phases of Project Management
(1) Investigation
(2) Design
(3) Production
(4) Evaluation
(5) commissioning
(6) aims
(7) brief
(8) schedule
(9) purpose
(10) completed
(11) success
(12) effectiveness
(13) efficiency
Use the following question and answer activity for further revision.
PROJECT MANAGEMENT
Questions
1. What is the role of a Project Manager?
2. Why are project management techniques used by organisations?
3. When were the first project management techniques documented?
4. Project management methodology has four distinct phases. What are they?
5. What does Phase 1, the Investigation phase of project management, involve? Who undertakes this phase?
6. List four steps in Phase 2, the Planning and Design Phase of project management.
7. What does Phase 3, the Production Phase of project management involve?
8. In the Evaluation and Monitoring phase of project management what questions might a Project Manager address?
Answers
1. Project Managers concern themselves with how to get a particular job done. They organise people, equipment and procedures in
an appropriate way to get a project completed in time and within budget.
2. Project Management techniques ensure that organisational objectives and system objectives are met in a timely, accurate,
relevant and complete way. They provide the adequate control of people, resources and procedures and clearly identify tasks that
must be completed and the desired completion time.
3. The first documented techniques were in the early 1900s with the development of the GANTT chart method.
4. Phase 1: Investigation
Phase 2: Planning and Design
Phase 3: Production
Phases 4: Monitoring and Evaluation
5. This phase involves the initial commissioning of the project, the identification of initial aims and goals and investigation into the
possible way the project can be completed. The Investigation phase is undertaken by top-level management or strategic planners.
6. Choose from any of the following:
Defining the exact purpose of the project and clearly defining goals
Breaking the project into tasks or activities and defining the purpose of each
Estimating the shortest and longest possible time required for each activity
Identifying milestones and key time markers in the project that keep the project on schedule
Determining the sequence of each activity and any constraints affecting the sequence
Deciding which activities should be completed before others can commence
Identifying activities that can be done simultaneously
Assigning resources, people, materials and equipment to activities
Costing of resources
Drawing up a calendar of events
7. This phases involves: providing resources, completing the set activities, monitoring, controlling and recording the progress of the
project on a GANTT chart, comparing current progress to the planned schedule, updating and refining the schedule as required and
monitoring resources to ensure there are no problems meeting the budget.
8. The Project Manager might address issues of quality asking questions such as: How well it has the project met the objectives? Is
the final quality of the product satisfactory? The Manager might also address issues of cost: Did the project stay within the budget
specified? Lastly issues of time would be considered: Did the project finish on or before the specified date? Was it the shortest
possible time for the project?
CHAPTER 15 INFORMATION TECHNOLOGY CASE STUDY
Case Study: Mira, Muse of the Spheres and Musicale Musak.
The story so far:
Bossperson, CEO of Musicale Musak, has convinced the board of her need for a Project Manager. She has placed an advertisement
in The Sage newspaper.
If you would like to view suggested answers to some of the questions posed in this animation, click here.
The skills required to manage the online music festival might include:
time management skills
resource management skills
excellent written and oral communication skills
excellent negotiation skills
financial management skills
team management skills
client and customer liaison skills
reporting and presentation skills
problem identification and solving skills
planning skills
computer and technical skills
Real life examples you might use to reinforce your project management skills:
The ability to meet a stated objective:
Handing in an assignment on time
Decorating a hall according to a clients/friends requirements
The ability to effectively manage time, people and resources:
Managing a school concert
Organising a fund raising event
The ability to work within set time frames:
Coordinating an office Christmas party
Organising a school year book
The ability to create succinct purposes and aims for projects:
Outlining the purpose and goal of a website designed to promote your company
The brainstorming process used when completing a group project or assignment
The ability to cost out a project in order to complete it in set time frames:
Working within budget to complete the schools annual yearly musical production
Working within a given budget to design the schools intranet
The ability to meet organisational objectives:
Meeting the schools requirements for the production of their intranet system
When organising the schools annual musical production gathering, using and evaluating feedback from students about their needs
and wants
The ability to identify essential tasks that must be completed:
Using a discussion team to brainstorm the activities involved in organising a sporting day
In the countdown to the publishing of the school newsletter the creation of daily meetings to identify and prioritise work
The ability to use a number of project management tools such as CPM, GANTT charts and PERT diagrams
choose any project where you used such tools and expand on how they helped you organise your workload and resources
CHAPTER 16 PROJECT MANAGEMENT TOOLS
Project Management Tools
This resource covers the tools used by a Project Manager beginning with 'GANTT' charts.
GANTT charts
A project plan is often constructed within the planning phase. It contains all activities and milestones. These events are placed in a
particular time sequence, ultimately producing something similar to a horizontal bar chart.
A GANTT chart displays tasks and costs along a horizontal time scale, much like a calendar. The time for each task is recorded, by
indicating the start and finish dates. It should show the best possible way to complete the project in the shortest time. Activities can
be done in parallel or sequentially, and the GANTT chart shows this clearly. Even though it lists tasks, it does not show the critical
path as there is no indication of the relationship between tasks.
From this GANTT chart you can find out the following,
Activity 3.0.2 Production Build:
Has a duration of 10 days
Must be done after Order Production Materials and Final Code Release
Must be done before Ship Product
Is expected to start 6/8/99 (mm/dd/yy)
Is expected to finish 6/21/99 (mm/dd/yy)
Is on the critical path (indicated in red)