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Production and Operations Management The Sharon Construction Corporation Case.

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Presentation on theme: "Production and Operations Management The Sharon Construction Corporation Case."— Presentation transcript:

1 Production and Operations Management The Sharon Construction Corporation Case

2 TEAM 07 Christina Danver Ben Gumpert Adan Montoya Gurinder Virdi

3 Problem Overhead cost of $500 per week for any delay after 48 weeks Penalty of $15,000 per week if project takes more than 52 weeks Possible Labor Strike (12/01/04) Possible Cold December

4 Alternatives 1.Expedite seat gallery supports 2.Expedite seat gallery supports and filling of the field 3.Expedite the roofing 4.Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring or heat when necessary; if a strike occurs, expedite all activities after resolution 5.Do nothing

5 Analysis of Baseline & A5 Do nothing (T cp = 48+x weeks)

6 Analysis of A1 Expedite pouring concrete for seat gallery supports ($20,000) (activity G from 12 to 6 weeks) (T cp =42+x)

7 Analysis of A2 Expedite pouring concrete for seat gallery supports ($20,000) (G from 12 to 6 weeks) and filling of the field ($10,000) (C from 14 to 9 weeks) (T cp = 42+x)

8 Analysis of A3 Expedite the roofing ($9,000) (activity K from 8 to 2 weeks) (T cp = 48+x)

9 Analysis of A4 with 8w strike Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring or heat when necessary; if a strike occurs, expedite all activities after resolution ($3,000 per week cut) (T cp = 52)

10 Analysis of A4 with 12w strike Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring or heat when necessary; if a strike occurs, expedite all activities after resolution ($3,000 per week cut) (T cp = 56)

11 Time analysis

12 Cost analysis

13 Risk Analysis

14

15 Risk Profiles

16

17 Recommendation 1.A4: Do nothing until December 1 st. If the cold is indeed extreme, postpone concrete pouring; if a strike occurs, expedite all activities after resolution (lowest E(x)) 2.A1: Expedite seat gallery supports (second lowest E(x))

18 Conclusion A1 is better than A2 and A3 if the probability/risk of a strike is considered. A4 provides the option of speeding up the remaining tasks in case of a strike and doing nothing otherwise. This option is powerful. A4 has a lower E(x), but a higher uncertainty SD(x) (broad range of losses from $0 to $76,000) than A1. The analysis of the risk profiles will help management to select the alternative which fits the corporation ’ s risk strategy. If the corporation is adverse to risk, it could select A1 (losses are spread out from $20,000 to $53,000). A1 has a lower uncertainty (SD(x)) than A4. The project duration could be a factor for the decision, if there are projects on hold due to lack of resources.


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