FAR EASTERN UNIVERSITY

Case # 3: Krudo Oil Co. Case

Operations Management
MBA 703
FEU-Manila

Submitted by:
 Reporting Group  Reacting Group
CASUGA, ELY
GIANAN, ANGELICA
MADURAR, ABEGAIL

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I. Case Background

Krudo Oil Company’s Palawan, manufacturing complex comprises several

operating units. These units process the crude oil that is pumped through and
transform it into a multitude of hydrocarbon products. The units run 24 hours a
day, 7 days a week, and must be shut down for maintenance on a predetermined
schedule. One such unit is Distillation Unit No. 5, or DU5.

Studies have demonstrated the way that DU5 can work for just 3 years
without significant gear breakdowns, and unreasonable loss of productivity.
Accordingly, DU5 is closed down like clockwork for cleaning, investigation, and
fixes. DU5 is the main refining unit for raw petroleum in the Palawan complex,
and its closure seriously influences any remaining working units. A portion of the
creation can be made up for by Krudo treatment facilities in different areas,
however, the rest should be handled and put away before the closure.

The hour of DU5's closure is basic, and the timeframe the unit is down should
be kept to a base to restrict creation misfortune. Krudo utilizes PERT as a
preparation and controlling device to limit closure time.

II. Statement of the Problem

What might be the earliest time probability to complete the upkeep of DU5?

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III. Assumptions

 The closure will most likely influence the result creation.

 Lead time will vigorously depend on the extent of turns out expected for
the machines versus the personal time period required.
 Rush Activity will significantly influence the aftereffect of the support.

IV. Areas of Consideration

 Maintenance - for the repair and maintenance of the units and to determine
the time.
 Production - for the possible loss in production once the repair and
maintenance are in progress.
 Procurement - for the acquisition of parts, services, and contract
management for third-party service providers.
 Finance – cost budget for procurement of supplier relative to the
maintenance project.
 Information Technology - an extension of business shall include to the
adaptation of the existing governing company to integrate information and
possible system upgrade.

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V. Framework (e.g. SWOT, Porter’s etc)

Strengths Weaknesses

 The lead time will be met  Breakdown of equipment.

even with the critical path.  Increase the repair and
 DU5 has only one downtime maintenance budget allotment.
per three years.  Because of the machine's
 Increase the efficiency of the extensive working time,
unit's operations. assessing each critical
component may take some
time.

Opportunities Threats

 Reduced downtime will have  Maintenance costs are higher.

a modest impact on the  Krudo Gasoline is in short
estimated output of supply.
production.

VI. Alternative Courses of Action (at least 4)

1.) Use the probabilistic method.

Advantages

 The team would be able to estimate how long the downtime would last.
 The activities will be determined by the path available.

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Disadvantage

 There is no guarantee that all parts of examined paths will be assessed

correctly.

2.) Buying New Machine and Equipment

Advantages
 This will be more development and solid than the old DU5 units.
 It will assist the Krudo oiling for tasks to be more useful.

Disadvantages
 It is expensive and Krudo needs to increment financial plan assignment
for the new machines and hardware.

3.) Apply PERT(Program Evaluation Review Technique) Planning

Advantages

 The individual is familiar with the procedure, which will aid in their
productivity.
 Krudo has already established the optimal moment to implement PERT
planning.

Disadvantages

 If Krudo uses this method, some of their operations will have to be shut
down.

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4.) Follow the agreed-upon timetable and stick to the initial lead time.

Advantages

 Organization will be able to do the necessary machine evaluation and

maintenance.
 The assessment will be carried out without compromising the machine's
service quality.

Disadvantage

 Expenses could increase due parts, labor, and idle time will all rise
dramatically.

VII. Action Plans

Activities Teams Timeline

Monitor the project. Operations Before and after completion.

Compute for the Before the scheduled

probabilistic approach. maintenance 1 week prior.

Coordinate with Before the scheduled

Facilities or technical maintenance 1 week prior.
engineers for the
schedules.

Implement planning and Facility or technical During the downtime for

application of activities Engineer maintenance.
for the maintenance of

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the DU5

Provide sources of funds Finance Before the maintenance

for the activity. activity. 1 month prior.

Provide and source for Procurement Must be available 1 week

the parts to be utilized before the scheduled
before the maintenance. maintenance.

VIII. Recommendation

We were able to compute and generate the critical path using the activities
provided, resulting in eight possible paths with varying timelines. This will serve
as a guide to the scope of work that will be performed during the maintenance.

With Path 1 as the critical path at 57.75 days, we can now derive the 1week
earlier timetable by subtracting 7 days from 57.75, giving us 50.75 days of
activity.

With a probability of 1, 2, 3, 4, 5, or 6 completion dates, we can use Table

B as the basis for our completion date computation. This gives us the activity
with the critical path has given us a result of +3 2.83 on day 6 as the highest
completion date of completion, indicating that the plan is on track.

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According to our calculations, increasing Krudo's budgets will help them shorten
the downtime of DU5 since they will be able to add new machines to their
equipment or invest in their staff so that repairs and maintenance can be
completed in a short amount of time.

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IX. Conclusion

We have estimated numbers based on the probabilistic technique that will

give us an idea of how we will be able to achieve the critical path and complete
the project ahead of schedule.

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