Project Scheduling: PERT/CPM

73-220

Lecture 20

1
Agenda
● Review of last class.
– PERT/CPM with unknown activity times
● Project scheduling – PERT/CPM
– Considering time-cost trade-off.
● Next Class

2
 Crashing Activity Times

■ In the Critical Path Method (CPM) approach to project

scheduling, it is assumed that the normal time to
complete an activity, tj , which can be met at a normal
cost, cj , can be crashed to a reduced time, tj’, under
maximum crashing for an increased cost, cj’.
■ Using CPM, activity j's maximum time reduction, Mj ,
may be calculated by: Mj = tj - tj'. It is assumed that its
cost per unit reduction, Kj , is linear and can be
calculated by: Kj = (cj' - cj)/Mj.

3
 Example: EarthMover, Inc.
EarthMover is a manufacturer of road construction
equipment including pavers, rollers, and graders.
The company is faced with a new
project, introducing a new
line of loaders. Management
is concerned that the project might
take longer than 26 weeks to
complete without crashing some
activities.

4
 Example: EarthMover, Inc.

Immediate Completion
Activity Description Predecessors Time (wks)
A Study Feasibility --- 6
B Purchase Building A 4
C Hire Project Leader A 3
D Select Advertising Staff B 6
E Purchase Materials B 3
F Hire Manufacturing Staff B,C 10
G Manufacture Prototype E,F 2
H Produce First 50 Units G 6
I Advertise Product D,G 8
It can be verified that it takes 30 weeks to complete the
whole project.
5
 Example: EarthMover, Inc.
● Crashing
The completion time for this project
using normal times is 30 weeks. Which
activities should be crashed, and by how
many weeks, in order for the project to be
completed in 26 weeks?

6
 Example: EarthMover, Inc.

■ Normal Costs and Crash Costs

Normal Crash
Activity Time Cost Time Cost
A) Study Feasibility 6 $ 80,000 5 $100,000
B) Purchase Building 4 100,000 4 100,000
C) Hire Project Leader 3 50,000 2 100,000
D) Select Advertising Staff 6 150,000 3 300,000
E) Purchase Materials 3 180,000 2 250,000
F) Hire Manufacturing Staff 10 300,000 7 480,000
G) Manufacture Prototype 2 100,000 2 100,000
H) Produce First 50 Units 6 450,000 5 800,000
I) Advertising Product 8 350,000 4 650,000

7
 Key Considerations
● Determine the max reduction time and unit time
crashing cost for each activity.
● Decision variables are set up in two groups: finish
time and time to crash for each activity.
● Three groups of constraints:
– Finish time >= earliest start + activity time.
– Crashed time <= max reduction.
– New deadline has to be honoured.
» Finish time for a node linked to Finish has to be within the new
deadline.
– Note:
» Earliest start >= finish time of each immediate predecessor.
» activity time = normal activity time – time to crash.

8
Max Reduction and Crashing Cost
Activity Max reduction Unit crashing cost

A 1 20,000=20,000/1
B 0 0
C 1 50,000=50,000/1
D 3 50,000 = 150,000/3
E 1 70,000=70,000/1
F 3 60,000=180,000/3
G 0 0
H 1 350,000=350,000/1
I 4 75,000=300,000/4

9
 Example: EarthMover, Inc.

■ Linear Program for Minimum-Cost Crashing

Let: Xi = finish time for activity i
Yi = the amount of time activity i is crashed
Min 20YA + 50YC + 50YD + 70YE + 60YF + 350YH + 75YI
s.t. YA < 1 XA > 0 + (6 - YA) XG > XF + (2 - YG)
YB < 0 XB > XA + (4 - YB) XH > XG + (6 - YH)
YC < 1 XC > XA + (3 - YC) XI > XD + (8 - YI)
YD < 3 XD > XB + (6 - YD) XI > XG + (8 - YI)
YE < 1 XE > XB + (3 - YE) XH < 26
YF < 3 XF > XB + (10 - YF) XI < 26
YH < 1 XF > XC + (10 - YF)
YI < 4 XG > XE + (2 - YG) Xi, Yj > 0 for all i
10
 Multiple Nodes Linked to Finish
G

Finish

● Two ways to formulate new deadline constraints:

– Without introducing a new decision variable.
» xG <= T, xH <= T (new deadline)
» each of the activities directly linked to the finish node has to be
finished within the new deadline.
– Introduce a new decision variable xFIN to indicate the project
finish time.
» xFIN >= xG, xFIN >= xH
» xFIN <= T (new deadline)

11
 Notes for the LP Solution

● After the LP model is solved, # of unit

times to crash for each activity is obtained
(See the worksheet on the next slide).
● To derive a new activity schedule for the
crashed times, it is necessary to apply the
routine PERT/CPM technique again.

12
 Excel Solution
Problem Data
Activity A B C D E F G H I
Normal time 6 4 3 6 3 10 2 6 8
Crash time 5 4 2 3 2 7 2 5 4
Normal cost 80 100 50 150 180 300 100 450 350
Crash cost 100 100 100 300 250 480 100 800 650
Maximum reduction 1 0 1 3 1 3 0 1 4
Crash cost per day20 0 50 50 70 60 0 350 75

Decision variables
Activity A B C D E F G H I
Finish time 5 9 8 18 16 16 18 24 26
Crash time 1 0 0 0 0 3 0 0 0

Objective function
Min 200

Constraints
Finish timeA B C D E F F G G H I I
LHS 6 4 3 9 7 10 11 2 2 6 8 8
Type >= >= >= >= >= >= >= >= >= >= >= >=
RHS 6 4 3 6 3 10 10 2 2 6 8 8
Maximum crash
A time B C D E F G H I
LHS 1 0 0 0 0 3 0 0 0
Type <= <= <= <= <= <= <= <= <=
RHS 1 0 1 3 1 3 0 1 4
Project completion time
LHS 24 26
Type <= <=
RHS 26 26

13
 Next Class
● Homework:
– Develop activity schedule and determine the critical
path for the example based on the NORMAL activity
times.
– Develop activity schedule and determine the critical
path for the example based on the CRASHED
activity times.
● Do more questions from Chapter 10.
● Read Section 11.1 EOQ Model in Inventory
Management.

YOU LEARN DECISION ANALYSIS BY DOING

DECISION ANALYSIS!!

14