University of Sahiwal

OPERATION RESEARCH

Network Models in Business

Approach
Lecture 4,5, 6
Dr. Bilal Anwar

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 Network analysis

Network analysis is the general name given to certain

specific techniques which can be used for the planning,
management and control of projects.
One definition of a project:
“A project is a temporary endeavor undertaken to
create a "unique" product or service or result”(PSR)
having a Definite Start and End

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PERT and CPM

PERT (program evaluation and review technique)

and CPM (critical path method) are two of the
most widely used techniques for planning and
coordinating large scale projects.

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 PERT and CPM

By using PERT or CPM managers are able to obtain:

 A graphical display of the project activities

 An estimate of how long the project will take
 An indication of which activities are most critical
 An indication of how long an activity can be delayed
without lengthening the project

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PERT and CPM

PERT Initial use was for the Polaris Missile

Project - Late 1950s developed by the US Navy.

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PERT and CPM

CPM was developed by El Dupont for Chemical

Plant Shutdown Project-used to plan and
coordinate maintenance projects in chemical
industry.

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PERT and CPM

 Although two techniques were developed

independently, they have a great deal in common.
 Used to planning and controlling many programs &
projects consisting of various activities.
 Both use same calculations, almost similar.

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NETWORK

 Graphical portrayal of activities and event.

 Shows dependency relationships between tasks/activities
in a project.
 Clearly shows tasks that must precede (precedence) or
follow (succeeding) other tasks in a logical manner.
 Clear representation of plan – a powerful tool for
planning and controlling project.

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 Framework of PERT and CPM

For proceeding with PERT/CPM following common six points

have to be followed:
 Define the project with significant activities or tasks

 Develop relationship among the activities

 Draw network connecting all activities

 Assign time and/or cost estimates to each activity

 Compute the critical path ( IS THE LONGEST PATH)

 Use network to help plan, schedule, monitor and

control the project

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 Terminology

Activity
A specific or set of tasks required by the project

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Terminology

Event
Outcome of one or more activities

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 Terminology

Network
Combination of all activities and events

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 Terminology

Path
Series of connected activities or between any two
events

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 Terminology

Critical path
Longest - Any delay would delay the project

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 Terminology

Slack/float
Allowable slippage for a path

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The Project Network

 Use of nodes and arrows

Arrows  An arrow leads from tail to head directionally

 Indicate ACTIVITY, a time consuming effort that is required
to perform a part of the work.

Nodes A node is represented by a circle

 Indicate EVENT, a point in time where one or more activities
start and/or finish.

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Activity on Node & Activity on Arrow

Activity on Node
- A completion of an activity is represented by a node.
Activity on Arrow
- An arrow represents a task, while a node is the completion of a
task
- Arrows represent order of events.

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 Activity Slack

Each event has two important times associated with it :

 Earliest time : Te , which is a calendar time when a event can

occur when all the predecessor events completed at the
earliest possible times.

 Latest time , TL , which is the latest time the event can occur
with out delaying the subsequent events and completion of
project.

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Activity Slack
 Difference between the latest time and the earliest time of an
event is the slack time for that event

Positive slack : Slack is the amount of time an event can be

delayed without delaying the project completion.

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Critical Path

 Is that the sequence of activities and events where

there is no “slack” i.e.. Zero slack

 Longest path through a network

 Minimum project completion time

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Benefits of CPM/PERT

 Useful at many stages of project management

 Mathematically simple
 Give critical path and slack time
 Provide project documentation
 Useful in monitoring costs

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Questions Answered by CPM & PERT

 Completion date?
 On Schedule?
 Within Budget?
 Critical Activities?
 How can the project be finished early at the least
cost?

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Activity relationship

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Activity relationship

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Activity relationship

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Dummy Activity

 Used whenever two or more activities start and end

on same node.
 A dummy activity takes no time, and it has no cost.

 Note: Activities can have only one start node and

only one end node.

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Dummy Activity

List of activities

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Dummy Activity

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Dummy Activity

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Dummy Activity

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 Example

Illustration of network analysis of a minor redesign of a product

and its associated packaging.
The key question is: How long will it take to complete this project ?

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 Example

Before starting any of the above activity, the questions asked would
be :
 What activities must be finished before this activity can start"
 could we complete this project in 30 weeks?
 could we complete this project in 2 weeks?
One answer could be, if we first do activity 1, then activity 2, then activity
3, ...., then activity 10, then activity 11 and the project would then take the
sum of the activity completion times, 30 weeks.

“What is the minimum possible time in which we can complete this project ? “

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Example

We shall see below how the network analysis diagram/picture

we construct helps us to answer this question.

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Example

CRITICAL PATH TAKES 24 WEEKS FOR THE COMPLETION OF THE

PROJECT

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Packages are available to determine the shortest path and
other relevant information.

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Use Forward & Backward pass to determine
Project Duration & Critical Path

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Use Forward & Backward pass to determine
Project Duration & Critical Path

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Use Forward & Backward pass to determine
Project Duration & Critical Path

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Use Forward & Backward pass to determine
Project Duration & Critical Path

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Example

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Example solution

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Example

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Example solution

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Example solution

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Example

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Example solution

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Example

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Example solution

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Example

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Example solution

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Make a Network Diagram

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Example solution

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Example

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Example solution

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Questions??

 Identify the critical path.

 How long will it take to complete this project?
 Can activity D be delayed without delaying the
entire project?, for how many days?
 What is the schedule for activity F (I.e., start and
completion times)

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Exercises

Ex. 1
 Draw a PERT Network, Identify Critical Path and
Calculate Critical Time.

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 Exercises

Ex. 2
 Take a Real World or Hypothetical Project, Identify

Activities, Estimate Activity Time and Draw a PERT

Network. Identify Critical Path and Calculate

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Limitations to CPM/PERT

 Clearly defined, independent and stable activities

 Specified precedence relationships
 Over emphasis on critical paths

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 Gantt chart
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A Gantt chart, commonly used in project management, is one of the most popular
and useful ways of showing activities (tasks or events) displayed against time. On
the left of the chart is a list of the activities and along the top is a suitable time
scale. Each activity is represented by a bar; the position and length of the bar
reflects the start date, duration and end date of the activity. This allows you to see
at a glance:
What the various activities are
When each activity begins and ends
How long each activity is scheduled to last
Where activities overlap with other activities, and by how much
The start and end date of the whole project
To summarize, a Gantt chart shows you what has to be done (the activities) and
when (the schedule).
 Gantt chart

Originated by H.L.Gantt in 1918

Advantages
- Gantt charts are quite commonly used.
They provide an easy graphical
representation of when activities (might)
take place.
Limitations
- Do not clearly indicate details regarding
the progress of activities
- Do not give a clear indication of
interrelation ship between the separate
activities