Page|1

NAME : Rahul Ramesh Davar

CLASS:MBA I BUSINESS ANALYTICS

ROLL NO: 11
SUBJECT: Simulation Modeling & Expert System

Exam Seat No - 5182

 Page|2

Assignment_3
Q1) What is inventory control explain various types of it and also its significance in simulation modelling
Q2) What is PERT Explain various Terminology, factors and parameters affecting PERT Network
Q3 calculate EOQ – Economic Order Quantity for a pen manufacturing company where the company’s annual quantity demanded is 400, holding cost is $2, and
the ordering cost is $1.
Q4) A small project consisting of eight activities has the following characteristics
Process (A) Excavate Immediate predecessor Nil Time required 2 weeks
Process (B) Lay the foundation Immediate predecessor A Time required 4 weeks
Process (C) Put up the rough wall Immediate predecessor B Time required10 weeks
Process(D) Put up the roof Immediate predecessor C Time required 6 weeks
Process (E) Install the exterior plumbing Immediate predecessor C Time required 4 weeks
Process (F) Install the interior plumbing Immediate predecessor E Time required 5 weeks
Process (G) Put up the exterior siding Immediate predecessor D Time required 7 weeks
Process(H) Do the exterior painting Immediate predecessor E, G Time required 9 weeks
Process (I) Do the electrical work Immediate predecessor C Time required 7 weeks
Process (J) Put up the wallboard Immediate predecessor F, I Time required 8 weeks
Process (K) Install the flooring Immediate predecessor J Time required 4 weeks
Process (L) Do the interior Immediate predecessor painting J Time required 5 weeks
M Install the exterior fixtures Immediate predecessor H Time required2 weeks
N Install the interior fixtures Immediate predecessor K, L Time required 6 weeks
Draw Network diagram and calculate Critic.al Path

Q1) What is inventory control explain various types of it and also its significance in simulation modelling
Inventory control is an activity of checking a shop’s stock and to maintain the inventory at desired levels, keeping in view the best economic interest of an
organization. In simple words, inventory control is a process of ensuring that a business maintains the adequate quantity of stock to meet the forecasted
demand with minimum holding cost. The below table explains different inventory types and the reason why such inventories are held by the business.
 Page|3

Raw materials The reason for holding raw materials is to reap the price
advantage available on purchase of bulk or on any
seasonal raw materials which can be procured only
during the harvest seasons.

Inventory in work-in- The reason is to balance the production flow. Let’s say if
progress any batch order which requires the same kind of raw
material, it can be diverted from the batch order that has
been postponed by the management for certain time
thereby not affecting the production flow.

Readymade components A company usually does not produce every component

that goes into the product. Sometimes they buy
readymade components available in the market. In such
a situation, it becomes necessary for the company to
hold stock of those readymade inventories which are
required in the production of the final product.

Finished goods A company stocks the finished goods during the waiting
period until it finds its customer. In some cases, more
stocks are held to create demand for the product and get
a high price for the product.
 Page|4

From the above, it’s quite clear that for various reason, you need to hold inventories in the business. In this process, how much to stock is an important
question that needs to be answered. Here is why inventory control plays an important role.

Importance of inventory control

Managing adequate stock is key for managing inventory successfully. Overstocking will lead to cash flow blockage and the additional cost for managing
excess stock. On the other hand, understocking leads to loss of sale due to non-availability of stock at the right time.

As a result, a business needs to implement inventory control so that the right product at the right place and the right time is available.

Inventory control helps the business in knowing the shortfall and quantities to be ordered considering the net stock available. Thus, it ensures that enough
stocks are maintained to meet customer needs, at any point in time.

Objectives of inventory control

Inventory control has two key objectives:

Customer service level

Why do you produce goods? The answer is simple it is to sell the goods at a good price. In an open market, there are so many manufactures who may produce
the same goods as you may. Then how could you be different and attract customers to your product? The answer here is plain, it’s only through proper
customer service.

Customer service means having the right goods available in the right quantity in the right place at the right time. This can only be achieved if you have proper
inventory control measures followed up in your organization.

Cost of holding inventories

Another objective of inventory control is to optimize the cost of ordering and carrying inventories. As we know that the overall objective of inventory control
is to achieve satisfactory levels of customer service by keeping the inventory costs within reasonable bounds.

Therefore, the cost of ordering inventories and carrying those inventories throughout the production is also important to keep the overall cost of selling as low
as possible.
 Page|5

Advantages of inventory control

 Maintaining an optimum level of inventories

 Helps in laying the procurement process considering the wait-time, lead-time etc.
 Periodical inspection of inventories
 Guides us on storing and issuance of inventories from godowns.
 A systematic record of movement of materials.
 It helps to lay out plans for physical verification of inventories.

Steps involved in inventory control

Step 1: Deciding on the minimum levels of inventories

A production department is incomplete if it does not have a good relationship with the sales and marketing department. It is because the demand or need for
the product you produce can only be assessed by people who are close to customers such as sales and marketing.

Thereby deciding on the levels of inventory i.e. maximum-minimum limits of inventory is important because as a manufacturer you would not like the raw
materials to go obsolete even before the production has begun or to stock up raw materials that have very limited use in the production of a finished product.

Step 2: To decide on the re-order level

The demand for anything is uncertain in this world. Especially with customers taste and preferences. A product manufactured by you may be selling high and
you must be ready to decide as how much to produce adhering to customer’s demand.

For which you have to decide as to when you will be re-stocking the raw materials which will be used in the production of the final product. If the restocking
time passes beyond the committed time of the finished product to the customer, then you will not be able to deliver a complete product to the customer.

Step 3: Choosing a sound inventory control method

There are several types of inventory control method available and you can choose the one which suits your business. No matter which method you choose, it
is important that the techniques should assist knowing the minimum quantity of stock, point in time at which the stock should be re-ordered and right quantity
that should be ordered.
 Page|6

Inventory Control Methods

The following are the different types of inventory control methods used by the business.

ABC analysis
Here, the stock is divided into three sections namely A, B and C. A section consist of inventories that are high in value with low sales frequency or
consumption. This category of stocks requires to be controlled closely. Category B consists of stocks that are of moderate value and with decent sales
frequency. In category C, you have inventories with low value having high sales frequency requiring minimum inventory control.

Just in time (JIT)

Here, the company maintains an inventory level that is required during production. Under this method, you will not be having any excess inventory beyond
the production requirements and it helps you get rid of the cost involved in storing excess stock. Here, the order of stock is placed when old stock is close to
zero and this puts production in risk, even if there are small delays.

Economic order quantity (EOQ)

In this method, the company will get to know how much quantity of inventory should the company order at any point of time and when should they place the
order considering the minimum level of inventory.

Fast, slow, and non-moving (FSN)

Here, the inventories are classified based on the movement. All the inventories are categorized as fast-moving, slow-moving, and non-moving. Basis the
movement across the categories, the order is placed.
 Page|7

Inventory control significance in simulation and modeling

IBM Sterling Inventory Visibility
See it. Sell it. Manage it more profitably.

 We’ve got the inventory visibility for that. IBM Sterling 2 High expectations Exceptional Omni channel customer experiences are hard to
deliver. In fact, they are so difficult to execute that 4 out of 5 CEOs say they are not able to do it profitably.
 1 And they are impossible to carry out without accurate visibility of your global inventory situation at any given time. More than 50% of
retailers have said that ‘inventory visibility across all channels’ was the most important Omni channel capability.
 2 Whether inventory is located in a warehouse, a distribution center, a physical storefront or on a truck somewhere, you cannot make
fulfillment promises to your customers without an accurate inventory picture.
 As consumers reset the expectations of fulfillment to being fast and free, and buying journeys, regardless of channel, become heavily
influenced by digital interactions, retailers and B2B businesses are adapting their operations to support new initiatives to meet those
expectations.
 These requirements put significant pressure on fulfillment and inventory leaders that have limited views of their inventory but are trying to
exceed customer expectations profitably. The problems However, there are many issues getting in the way of providing your B2C and B2B
customers with the experiences they expect, never mind ones that exceed their expectations.
 Do you have silos of inventory or multiple inventory systems of record? Some companies have inventory segmented by sales channels for
specific customers or types of customers, while others have multiple inventory systems due to acquisitions over the years. What this means is
that sometimes you have inventory that meets your customer’s needs and timing, but you just can’t see it, so you lose the sale. What should
be a global view of all available-to-promise inventory is instead just a keyhole view of a subset of it. Move inventory Adjusting safety stock
 3 Another problem is inaccurate inventory records. This can be caused by batch processing or system latency due to higher-than-planned
inventory actions such as web and call center searches, items being reserved for a cart and orders being placed. However, if you have
inaccurate inventory information, you run the risk of: – overpromising on inventory you don’t have, – losing sales you could have made with
replenishment inventory that hasn’t updated yet, – unexpected expedited shipping charges because inventory isn’t where you thought it was,
– not being able to expand your sales channels because you can’t meet marketplace SLAs regarding inventory accuracy and meeting your
customer promise dates.
 Page|8

 The last issue many companies see is balancing safety stock. Without enough safety stock you can lose sales and disappoint your customers
and potentially lose them forever. Too much safety stock means big markdowns and lost margins at the end of the season or when the
inventory is old or outdated.
 Balancing safety stock is even more difficult if you have silos or segmented inventory because you cannot share safety stock across your
entire organization to keep your inventory carry costs down.
 So how can IBM help? IBM Sterling Inventory Visibility works with your existing systems to provide a single, scalable, real-time view of
inventory and demand so you can grow sales, protect margins and increase customer satisfaction. It is a cloud-based SaaS solution that
rapidly processes extremely high inventory supply and demand update activity and presents an accurate real-time availability picture to the
channels of promise.
 Say “yes” more often to customers See all your inventory on hand across disparate systems and silos Get accurate, scalable inventory views
Meet peak-period demand and avoid overpromising, losing sales or incurring unexpected charges Maximize inventory ROI Reduce safety
stock and carrying costs, and increase inventory turns Inventory dashboard Say “yes” more often to your customers Break down those
inventory silos and disparate systems so you can broaden that keyhole view and see all your available-to promise inventory.
 IBM Sterling Inventory Visibility provides you an inventory hub with a single view of inventory and a dashboard you can personalize for
your job requirements, so you can see and manage all your inventory. You can also expand your customer offerings with “endless aisle” by
seamlessly integrating your inventory with your suppliers and enabling drop shipping. Get accurate, scalable inventory views Don’t get
bogged down during peak seasons – meet peak-period demand with our SaaS solution which has up-to-the-minute inventory accuracy.
 This highly accurate inventory view helps you avoid overpromising, losing sales or incurring unexpected, expedited shipping charges. Our
system uses Akamai gateways and Cassandra databases to provide views of in-store and warehouse inventory with the speed and accuracy
you need to provide improved customer fulfillment experiences. On top of that, our solution does not require IT assistance to ramp up and
down as your demand changes over time, which frees up those IT resources to focus on providing better experiences for your customers.
 Maximize inventory ROI When you have a single, accurate view of all your inventory, you can reduce cross-company safety stock and
inventory carrying costs and share safety stock across your organization, so there’s no need to have multiple, disjointed reserves in every silo
or channel. Track the demand for inventory so you can customize safety stock by location and SKU – and get cross channel insights to better
balance inventory after the planning and deployment process ends.
 And the best part? It’s designed to integrate seamlessly with your existing commerce, order management or ERP systems, as well as new
sales channels, so you don’t need to take on a long or expensive IT initiative to start exceeding business goals and delivering more satisfying
fulfillment experiences for every customer. 4 Inventory by SKU Summary Customer expectations for B2C companies are being driven
 Page|9

higher and higher by several pure digital players and these expectations are carrying over to B2B companies as well. To succeed in this Omni
channel world, companies must be able to give customers exactly what they want, where and when they want it.
 The only way to deliver on that promise is with a single, accurate view of all your inventory. For fulfillment leaders, IBM Sterling Inventory
Visibility provides a single, scalable, real-time view of inventory to grow sales, protect margins and increase customer satisfaction. To learn
more about IBM Sterling Inventory Visibility for your inventory and sourcing needs, contact your IBM representative or IBM Business
Partner, or explore the solution today

Q2) What is PERT Explain Various Terminology, factors and parameters affecting PERT Network
What is PERT Explain
What Is a Program Evaluation Review Technique (PERT) Chart
A PERT chart is a project management tool that provides a graphical representation of a project's timeline. The Program Evaluation
Review Technique (PERT) breaks down the individual tasks of a project for analysis. PERT charts are considered preferable to Gantt
charts because they identify task dependencies, but they're often more difficult to interpret.

KEY TAKEAWAYS

 PERT charts were first created by the U.S. Navy's Special Projects Office in 1957 to guide the Polaris nuclear submarine
project.
 A PERT chart uses circles or rectangles called nodes to represent project events or milestones. These nodes are linked by
vectors, or lines, that represent various tasks.
 A PERT chart allows managers to evaluate the time and resources necessary to manage a project.
 P a g e | 10

How a PERT Chart Works?

A PERT chart helps a project manager analyse a project's tasks and estimate the amount of time required to complete each task in the
project. Using this information, the project manager can estimate the minimum amount of time required to complete the entire
project. This information also helps the manager develop a project budget and determine the resources needed to accomplish the
project.

A PERT chart uses circles or rectangles called nodes to represent project events or milestones. These nodes are linked by vectors or
lines that represent various tasks. Dependent tasks are items that must be performed in a specific manner. For example, if an arrow is
drawn from Task No. 1 to Task No. 2 on a PERT chart, Task No. 1 must be completed before work on Task No. 2 begins.

Items at the same stage of production but on different task lines within a project are referred to as parallel tasks. They're independent
of each other, but they're planned to occur at the same time.
 P a g e | 11

A well-constructed PERT chart looks like this:

Image by Sabrina Jiang © Investopedia 2020

 P a g e | 12

Interpreting PERT Charts

A PERT chart is a visual representation of a series of events that must occur within the scope of a project’s lifetime. The direction of
arrows indicates the flow and sequence of events required for project completion. Dotted activity lines represent dummy activities—
items that are located on another PERT path. Numbers and time allotments are assigned and shown inside each vector.

These charts have their distinct definitions and terms, the most important of which anticipate how long it will take to finalize a
project. "Optimistic time" refers to the shortest duration. "Pessimistic time" is logically the longest it might take. The "most likely
time" indicates a reasonable estimate of the best-case scenario, whereas "expected time" accounts for problems and obstacles.

Advantages and Disadvantages of PERT Charts

A PERT chart is similar to a critical path analysis (CPA), which is another method that project managers use to chart tasks in a
project. The main difference between the two is that a PERT chart uses various time frames and probability terms when estimating
each project stage. As a project management tool, PERT charts offer some distinct advantages and disadvantages.

Advantages
A PERT chart allows managers to evaluate the time and resources necessary to manage a project. This evaluation includes the ability
to track required assets during any stage of production in the course of the entire project.

PERT analysis incorporates data and information from multiple departments. This combining of information encourages department
responsibility and it identifies all responsible parties across the organization. It also improves communication during the project and it
allows an organization to commit to projects that are relevant to its strategic positioning.

Finally, PERT charts are useful for what-if analyses. Understanding the possibilities concerning the flow of project resources and
milestones allows management to achieve the most efficient and useful project path.

Disadvantages
The use of a PERT chart is highly subjective and its success depends on the management’s experience. These charts can include
unreliable data or unreasonable estimations for cost or time for this reason.
 P a g e | 13

PERT charts are deadline-focused and they might not fully communicate the financial positioning of a project. Because a PERT chart
is labour-intensive, the establishment and maintenance of the information require additional time and resources. Continual review of
the information provided, as well as the prospective positioning of the project, is required for a PERT chart to be valuable.

Real World Example of PERT Charts

PERT charts were first created by the U.S. Navy's Special Projects Office in 1957 to guide the Polaris Fleet Ballistic Missile project.
Using the PERT model, Navy project managers were able to evaluate the progress of their project, determine the validity of
schedules, and estimate the effects of proposed changes to established plans. 1 The success of this initial use of PERT charts has
caused them to be used ever since all over the world and in numerous industries.

Factors
The Significance/factors of PERT

The world we live in today is experiencing tremendous growth and rapid development; organizations are experiencing more competition
now more than an ever and a project manager who wants to stand out would have to utilize all resources at his disposal to deliver quality results
at a faster rate.

To do that he will need to be at the top of his game to efficiently coordinate the activities that will result in the successful execution of his
project. He will need to be up to date on the tools and techniques that will aid in his delivery and one of such methods is PERT.

What is PERT in Project Management?

PERT is an acronym that stands for Project Evaluation Review Technique. PERT in project management refers to a technique that is used to
estimate the accurate time it would take to complete a given activity.

Prior to the commencement of any project, it is important that the project team have an idea of how long it would take to execute the project.
This is essential because it makes sure that the project manager knows exactly how long it would take to get the project completed and so can
factor that in when deciding on a budget for the project.
 P a g e | 14

The Program Evaluation and Review Technique is a system that aids the scheduling and coordination of tasks during a project. It was developed
in the 1950s by the U.S Navy during the development of a submarine missile program by the Navy’s Special Projects Office.

A similar statistical method for forecasting progress in project management is the Critical Path Method (CPM). This was developed for project
management personnel in the private sector.

The PERT Technique

The Pert Technique is a statistical way of representing project milestones as a network diagram. It predicts project completion times putting into
consideration, the risk of uncertainty. It allows the project manager who is often responsible for scheduling, and coordinating a series of
complex tasks and activities, the ability to monitor the progress of a project.

The PERT Technique is depicted in a flowchart, where the events are represented as nodes. The nodes can either indicate the beginning or the
end of activities. The directional lines represent the tasks that are to be carried out while the arrows represent the sequencing of the activities.
The network diagram always features a single start node and a single finish node.

In simple terms, it depicts the time taken by each element of the project and the total time estimated for its completion, thereby revealing slack
periods as the project progresses.

The method takes into consideration these three factors;

1. The most optimistic time (O) – This is in relation to a situation where everything is expected to go right.
2. The most pessimistic time (P) – This takes into consideration a situation where everything goes wrong.
3. The most probable time (M) – This considers a situation where everything takes place as expected.

The first step to calculating the expected project duration would be to calculate the expected time for each activity.

NB: On the network diagram, it is possible to have more than one starting point.

The formula for weighted average is given as:

 P a g e | 15

E = (O + 4M + P)/6

To calculate the standard deviation, it’s a simple matter of deducting the pessimistic value from the optimistic value. The subsequent result is
then divided by 6.

The formula is given as:

S.D. = (E – O)/6

In Summary
The PERT technique is always used alongside the Critical Path Method when estimating project duration and calculating variances. For
computing a wider range of complex activities, computers are employed for the analysis of project networks.

The Program Evaluation and Review Technique is advantageous to project managers as it not only helps them stay organized but helps them
identify critical components of the project, estimates the project duration and helps identify slack times; giving the project manager a clear
picture of where the project is at any given time.

FACTORS AFFECTING THE SUCCESSFUL APPLICATION

OF PERT/CPM SYSTEMS IN A GOVERNMENT ORGANIZATION
ABSTRACT. PERT/CPM in project management scheduling systems is applied and used less frequently than the literature would seem to suggest. Eighteen
almost-identical government units were studied to document a situation that appears to be ideally suited to PERT/CPM but where the success ratio was 4 out of
18 cases. We then identify some factors to explain why or why not the PERT/CPM techniques were not successful. Of nine factors identified, the two important
factors turned out to be ( 1) the level of person making the introduction and (2) the stated purpose Of the introduction. Suggestions for improving acceptance then
conclude the paper.

Introduction
Network analysis, such as CPM and PERT, can help the project manager in planning, scheduling, and controlling scarce project resources. The
project network provides an overall plan for reaching organizational objectives. With such a potential, it would seem that networks in some form
 P a g e | 16

would be quickly introduced and utilized in most project organizations, but we have no evidence that this is the case. This paradox should be of
concern to students of network analysis systems. Unfortunately, the majority of these students have paid little attention to the problem of
application and retention. Most of their efforts have been to develop more sophisticated variations of the basic network models.
The purpose of this article is to identify factors which account for the success or failure in Introducing network scheduling systems. The authors
were fortunate in being able to observe a government agency which had many organizational subunits, similar in organizational structure, facing
a managerial problem ideally suited to network analysis. The personnel were predominantly college educated, well-motivated, and open to
improvements. While network analysis was introduced in most of the subunits, the number of units retaining the technique was limited. There
were differences among subunits in the way in which the network techniques were introduced. Some of the differences appear to allow
prediction of continued utilization of network analysis.

Q3. calculate EOQ – Economic Order Quantity for a pen manufacturing company where the
company’s annual quantity demanded is 400, holding cost is $2, and the ordering cost is $1

EOQ (Economic Order Quantity)

What is EOQ?

EOQ stands for economic order quantity and it helps to find a volume of production or order that the
company should add with the objective of minimizing the holding cost and ordering cost.
EOQ Formula

Let us look at the critical components of EOQ and its formula –

 P a g e | 17

#1 – Holding Cost
Holding cost is the cost of a holding of inventory in storage. It is the direct cost that needs to be calculated
to find the best opportunity whether to store inventory or instead of it invest it somewhere else- assuming
demand to be constant.
H = i*C

Where,

 H= Holding cost
 i= Carrying cost
 C= Unit cost

Here as demand is constant, inventory will decrease with usage when it reduces to zero-order placed again.

#2 – Ordering Cost
Ordering cost is the cost of placing an order to the supplier for inventory. The number of orders is calculated
by the annual quantity demanded divided by volume per order.

Number of orders = D / Q

Where,

 D = Annual quantity demanded

 P a g e | 18

 Q = Volume per order

 Annual Ordering Cost

An annual ordering cost is the number of orders multiply by ordering costs.

Annual ordering cost = (D * S) / Q

Where,

 S = Ordering cost

#3 – Annual Holding Cost

Annual holding cost is the sum product of volume per order and holding cost, which can be written as.

Annual Holding Cost= (Q * H) / 2

#4 – Total Cost
The sum of the two costs gives an annual total cost of an order.

By adding annual ordering cost and annual holding cost, we get below equation. -

Annual Total Cost or Total Cost = Annual ordering cost + Annual holding cost

Annual Total Cost or Total Cost = (D * S) / Q + (Q * H) / 2

 P a g e | 19

To find EOQ – Economic Order Quantity Formula, differentiate total cost by Q.

EOQ = DTC / DQ

EOQ = √ (2SD/H)
to calculate EOQ – Economic Order Quantity for a pen manufacturing company where the company’s
annual quantity demanded is 400, holding cost is $2, and the ordering cost is $1. Now we will put these values
in the above equation.

In the below-given figure, we have shown the calculation for the EOQ for a pen manufacturing company.

So, the calculation for EOQ2 = (2*400*1)/2

 P a g e | 20

Therefore , EOQ =20.

Q4) A small project consisting of eight activities has the following characteristics
Process (A) Excavate Immediate predecessor Nill Time required 2 weeks
Process (B) Lay the foundation Immediate predecessor A Time required 4 weeks
Process (C) Put up the rough wall Immediate predecessor B Time required10 weeks
Process(D) Put up the roof Immediate predecessor C Time required 6 weeks
Process (E) Install the exterior plumbing Immediate predecessor C Time required 4 weeks
Process (F) Install the interior plumbing Immediate predecessor E Time required 5 weeks
Process (G) Put up the exterior siding Immediate predecessor D Time required 7 weeks
Process(H) Do the exterior painting Immediate predecessor E, G Time required 9 weeks
Process (I) Do the electrical work Immediate predecessor C Time required 7 weeks
Process (J) Put up the wallboard Immediate predecessor F, I Time required 8 weeks
Process (K) Install the flooring Immediate predecessor J Time required 4 weeks
Process (L) Do the interior Immediate predecessor painting J Time required 5 weeks
M Install the exterior fixtures Immediate predecessor H Time required2 weeks
N Install the interior fixtures Immediate predecessor K, L Time required 6 weeks
Draw Network diagram and calculate Critic.al Path
 P a g e | 21

Solution

Immediate Estimated
Activity Activity Description Predecessors Duration

A Excavate — 2 weeks
B Lay the foundation A 4 weeks

C Put up the rough wall B 10 weeks

D Put up the roof C 6 weeks

E Install the exterior plumbing C 4 weeks

F Install the interior plumbing E 5 weeks

G Put up the exterior siding D 7 weeks

H Do the exterior painting E, G 9 weeks

I Do the electrical work C 7 weeks

J Put up the wallboard F, I 8 weeks

K Install the flooring J 4 weeks

L Do the interior painting J 5 weeks

M Install the exterior fixtures H 2 weeks

N Install the interior fixtures K, L 6 weeks

 P a g e | 22

0
1
START Activity Code
A. Excavate
B. Foundation
A2
C. Rough wall
D. Roof
E. Exterior plumbing
B4 F.
G. Interior plumbing
H. Exterior siding
C 10 I. Exterior painting
J. Electrical work
K. Wallboard
L.
D6 E4 I7 M. Exterior fixtures
N. Interior fixtures

G7 F5

J8
H9
K4 L 5

M2
N6

END
 P a g e | 23

CRITCAL PATH

The Critical Path

How long should the project take? We noted earlier that summing the durations of all the activities gives a grand total of 79 weeks.
However, this isn’t the answer to the question because some of the activities can be performed (roughly) simultaneously.
What is relevant instead is the length of each path through the network.
A path through a project network is one of the routes following the arcs from the START node to the FINISH node. The length of a path is the sum of the (estimated)
durations of the activities on the path.

The six paths through the project network in Fig. 10.1 are given in Table 10.2, along with the calculations of the lengths of these paths.
The path lengths range from 31 weeks up to 44 weeks for the longest path (the fourth one in the table).
So given these path lengths, what should be the (estimated) project duration (the total time required for the project)? Let us reason it
out.
Since the activities on any given path must be done one after another with no overlap, the project duration cannot be shorter than the
path length. However, the project duration can be longer because some activity on the path with multiple immediate predecessors might
have to wait longer for an immediate predecessor not on the path to finish than for the one on the path. For example, consider the second
path in Table 10.2 and focus on activity H. This activity has two immediate predecessors, one (activity G) not on the path and one
(activity E) that is. After activity C finishes, only 4 more weeks are required for activity E but 13 weeks will be needed for activity D and
then activity G to finish. Therefore, the project duration must be considerably longer than the length of the second path in the table.
 P a g e | 24

TABLE 10.2 The paths and path lengths through Reliable’s project network
Path Length

START A-B-C-D-G-H-M- FINISH 2 4 10 6 7 9 2 6 40 weeks

START A-B-C-E-H-M- FINISH 2 4 10 4 9 2 2 6 31 weeks
START A-B-C-E-F-J-K-N FINISH 2 4 10 4 5 8 4 6 43 weeks
START A-B-C-E-F-J-L-N FINISH 2 4 10 4 5 8 5 6 44 weeks
START A-B-C-I-J-K-N FINISH 2 4 10 7 8 4 6 6 41 weeks
START A-B-C-I-J-L-N FINISH 2 4 10 7 8 5 6 6 42 weeks
However, the project duration will not be longer than one particular path. This is the longest path through the project network. The
activities on this path can be performed sequentially without interruption. (Otherwise, this would not be the longest path.) Therefore, the
time required to reach the FINISH node equals the length of this path. Furthermore, all the shorter paths will reach the FINISH node no
later than this.
Here is the key conclusion.
The (estimated) project duration equals the length of the longest path through the project network. This longest path is called the critical path. (If more than one path tie for
the longest, they all are critical paths.)

Thus, for the Reliable Construction Co. project, we have

Critical path: START A-B-C-E-F-J-L-N FINISH
(Estimated) project duration 44 weeks