Operational Research (OR)

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ASSIGNMENT
XLRI-PGCBM-18

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Table of Contents
1.

PROBLEM: ........................................................................................................................................................................... 3

2.

SOLUTION: ......................................................................................................................................................................... 4
2.1
M ANUAL APPROACH..................................................................................................................................................... 4
2.2
L INEAR PROGRAMMING APPROACH .............................................................................................................................. 5
2.2.1 Decision Variables:.......................................................................................................................................... 5
2.2.2 Objective Function: ........................................................................................................................................ 5
2.2.3 Constraints: ....................................................................................................................................................... 5
2.3
EXCEL SOLUTION...........................................................................................ERROR! BOOKMARK NO T DEFINED.
2.3.1 Excel Solution Embedded: ....................................................................... Error! Bookmark not defined.

3.

ANALYSIS: ..................................................................................................ERROR! BOOKMARK NOT DEFINED.

3.1
3.2

S ENSITIVITY ANALYSIS: OBJECTIVE FUNCTION............................................ERROR! BOOKMARK NO T DEFINED.

S ENSITIVITY ANALYSIS: RIGHT H AND SIDE OF THE CONSTRAINTS................ERROR! BOOKMARK NO T DEFINED.

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Problem:
Mr. Ramesh Chandra is a Software Development Project Manager in one of the renowned Indian
Software Services Company, namely ABC Technologies. The companys business division has
recently won a project from a major European telecom company. This Project is very important for
the ABC Technologies as it is first time the company is entering in the telecom sector for t he
software services.
The ABC Technologies has been given whole end to end responsibility for this software package
from Requirement Analysis till final Deployment.
Customer has communicated recently to the business director of ABC Technologies that they would
like to see the final Project Plan with a Breakdown of the tasks, Total Cost of the Project and Total
duration of the Project by end of next week.
ABC Technologies management has decided to assign Ramesh Chandra as the Project Manager for
this Project and has been told to come up with the Project Plan so that they can share it with the
Customer by end of next week. Ramesh has already been provided with all the required inputs so that
he can be prepared for the plan.
Mr. Ramesh worked very hard and came up with the following plan.

Table-1: Initial Plan

Durations and Effort are here in Person Days (pdays).
AS per this plan, Activities/Tasks A-B-C-D-E-F-H-I-L-M are on Critical Path and the Project duration
comes to 64 days.
The Total Cost of the Project comes to $20,000.
During the plan discussion with the customer, customer commented that the duration of 64 days for
this project is not acceptable to them and they would like the project duration be reduced by at least
20 days with a very minimal extra cost impact.
Ramesh agreed during the meeting that he would try to reduce the duration and will come up with
the new plan in a couple of days.

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1.

Solution:

Being a Project Manager, Ramesh knows that Project time cam be reduced by a techniqu e called
Crashing which takes care to reduce the duration on a minimal extra cost.
To start the Crashing, Ramesh needs to know how much time each activity can be crashed to and how
much it will cost. He starts this activity and comes with the following analysis for each activity.
Durations and Effort are here in Person Days (pdays).

Table-2: Plan with Crash Time and Crash Cost against each activity.
There are two approaches to the problem:

1.1

Manual Approach

For crashing project time, the first task is to identify the normal critical path and the critical
activities. Then it is required to determine the crash cost per time period (cost-time slopes) for
various activities. The cost-time slopes can be computed using the following formula:
Slope =

Crash Cost Normal Cost

-------------------------------------Normal Time Crash Time

The next step is to identify the activity on the critical path with the smallest crash cost per time
period. This activity will be crashed to the maximum possible extent or to the point at which
managements desired deadline has been reached.
Then it should be checked that the critical path that were being crashed is still critical. If the path is
still critical then crash the activity that has second lowest cost-time slopes and continue this process
until the goal has been reached. If, a reduction in a critical activity time causes a non-critical path or
paths to become critical, then the crash will be continued along with the new critical path based on
the lowest cost time slopes of the new path.

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1.2

Linear programming approach

The linear programming is a tool for decision making under certain situation. So, the basic assumption
of this approach is that to know some relevant data with certainty.
The basic data requirements are as follows:
1) To know the project network with activity time, and their precedence sequence.
2) To what extent an activity can be crashed.
3) The crash cost associated with per unit of time for all activities.
These r equirements are iden tified in Table-2.
Now lets define the variable of the problem.

1.2.1 Decision Variables:

For each activity i, following two variables can be defined.

Ti = Time at each activity i, starts.

Ci = Number of periods (days in this case) by which an activity i, is crashed.
1.2.2 Objective Function:
The objective function here is to minimize the total cost of crashing the project down to 47
(64-20 = 44) days. Using the crash cost per week computed in Table-2.
The Crash Cost per week per activity is computed us ing following formula:
Crash Cost Normal Cost
-------------------------------Normal Time Crash Time
So the objective function can be expressed as follows.

MIN (Z) = $0C a+ $500C b +$222C c +$500C d +$545C e +$500C f +$500C g +$500Ch
+667C i+250C j+ $286Ck + $400Cl +$667C m
1.2.3 Constraints:
This objective function is subject to some constraints. These constraints can be classified in to three
categories.
1) Precedence Constraints:
These set of constraints describe the structure of the network. As we know, the activities of a project
are interrelated, the starting of some activities is dependent upon the completion of some other
activities; we must have to establish work sequence of the activities through constraints. For this
problem the precedence constraints are defined as below:
The precedence for each activity is given in below Table-3 in column Predecessors

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Table-3: Precedenc e Relationship of the Activities

Fig-1: Project Network Diagram

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A->B
B->C
C->D
C->K
C->J
D->E
E->F
E->K
E->G
E->J
F->H
H->I
G->I
I->L
J->L
K->L
L->M

Tb >= Ta + 4-Ca
Tc >= Tb + 8-Cb
Td>= Tc +9-Cc
Tk >= Tc +9-Cc
Tj >= Tc+9-Cc
Te >=Td+6-Cd
Tf >= Te+11-Ce
Tk >= Te+11-Ce
Tg>= Te+11-Ce
Tj >= Te+11-Ce
Th >= Tf + 4- Cf
Ti >= Th + 8-Ch
Ti >= Tg + 4-Cg
Tl >= Ti + 6-Ci
Tl >= Tj + 16-Cj
Tl >= Tk + 14-Ck
Tm >= Tl + 5-Cl

i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.
i.e.

Tb-Ta+ Ca >=4
Tc-Tb+ Cb >=8
Td - Tc + Cc >=9
Tk - Tc + Cc>=9
Tj Tc + Cc >=9
Te Td + Cd>=6
Tf - Te + Ce >=11
Tk Te + Ce >=11
Tg - Te + Ce >=11
Tj Te + Ce >=11
Th - Tf + Cf >= 4
Ti Th + Ch >=8
Ti - Tg + Cg >=4
Tl Ti + Ci >=6
Tl Tj + Cj >=16
Tl Tk + Ck>=14
Tm - Tl + Cl >=5

Table-4: Precedenc e Constraints

For e.g. consider the precedence relationship between activities A and B. Activity A starts at time Ta
and its duration is (4-Ca) days where Ca is the duration activity A can be crashed. Hence activity A
finishes at time (Ta+4-Ca).This implies that activity B start time (T b) can be no earlier than (Ta+4-Ca).
It can be expressed mathematically as:
Tb >= Ta + 4-Ca , it can also be written as Tb-Ta+ Ca >=4.
In a similar fashion, precedence relationship of all other activities are expressed in Table-4
2) Crash Time Constraints:
We can reduce the time to complete an activity by simply increasing the resources or by improving
the productivity which also require the commitment of additional resources. But it is not possible to
reduce the time required to complete an activity after a certain threshold limit. Strive for such
intention will result in superfluous resources employment which will be an inefficient approach. That
is why the allowable time to crash an activity has a limit.

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