Resource allocation
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Resource Allocation. BBUS541 Hiroshi Ochiumi. Introduction. Projects Compete With One Another for Resources resources that are not consumed resources that are consumed Goal of Resource Allocation is to Optimize Use of Limited Supply Requires making trade-offs time constrained

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Resource Allocation

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Resource Allocation

BBUS541

Hiroshi Ochiumi


Introduction

  • Projects Compete With One Another for Resources

    • resources that are not consumed

    • resources that are consumed

  • Goal of Resource Allocation is to Optimize Use of Limited Supply

  • Requires making trade-offs

    • time constrained

    • resource constrained


Expediting a Project

BBUS541

Hiroshi Ochiumi


Expediting a Project

  • Time-Cost Trade-off Model

    • A model that develops the relationship between direct project costs, indirect costs, and time to complete the project by minimizing the sum of direct and indirect costs.

  • Crash Costs

    • The additional costs of an activity when time to complete it is shortened.


Minimum Cost Scheduling

Step 1:Prepare CPM-type network diagram.

a. Normal cost (NC)

b. Normal time (NT)

c. Crash time (CT)

d. Crash Cost (CC)

Step 2:Determine the cost per unit of time to expedite (or crash) each activity.

Step 3:Compute the critical path.

Step 4:Shorten the critical path at the least cost.

Step 5: Plot project direct, indirect, and total-cost curves and find the minimum-cost schedule.


Example 1

5

B

3

2

2

7

D

A

7

10

ES=0

EF=2

4

C

2

6


Summary of Activity Times and Costs


Calculation of Cost Per Day to Expedite Each Activity


Cost per day to Expedite


Critical Path?

  • A-B-D

    2+5+3=10

  • A-C-D

    2+4+3=9


“Crash” A-B-D path by 1

  • Where exactly do we want to crash?


Network Diagram

5

Cost +2

B

2

2

2

7

D

A

7

9

ES=0

EF=2

4

C

2

6


Cost per day to Expedite


Critical Path?

  • A-B-D

    2+5+2=9

  • A-C-D

    2+4+2=8


Crash A-B-D by 1

  • Where do we want to crash?


Network Diagram

5

Cost +2+2

B

1

2

2

7

D

A

7

8

ES=0

EF=2

4

C

2

6


Cost per day to Expedite


Critical Path?

  • A-B-D

    2+5+1=8

  • A-C-D

    2+4+1=7


Crash A-B-D by 1

  • Where do we want to crash?


Network Diagram

4

Cost +2+2+3

B

1

2

2

6

D

A

6

7

ES=0

EF=2

4

C

2

6


Cost per day to Expedite


Critical Path?

  • A-B-D

    2+4+1=7

  • A-C-D

    2+4+1=7


Crash both paths by 1

  • Where do we want to crash?

    • Do we want to crash C?


Network Diagram

4

Cost +2+2+3+4

B

1

1

1

5

D

A

5

6

ES=0

EF=1

4

C

1

5


Cost per day to Expedite


Critical Path?

  • A-B-D

    1+4+1=6

  • A-C-D

    1+4+1=6


Crash both paths by 1

  • Where do we want to crash?

    • Do we want to crash C only?


Network Diagram

3

Cost +2+2+3+4+3+2

B

1

1

1

4

D

A

4

5

ES=0

EF=1

3

C

1

4


Cost per day to Expedite

  • Can we continue?


Example 2


Example 2

  • Can we use Excel Solver?


Using Excel Solver to Crash a Project

  • Objective

    • minimize crashing costs

  • Decision Variables

    • amount to crash activities

    • time events occur, or EST’s

  • Constraints

    • amount each activity can be crashed

    • precedence relationships

    • complete project by specified time

    • nonnegativity


Resource Loading

BBUS541

Hiroshi Ochiumi


Resource Loading

  • Amount of specific resources that are scheduled for use on specific activities or projects at specific times.

  • Usually a list or table.


Resource Leveling

BBUS541

Hiroshi Ochiumi


Last week

  • We evaluated project durations only in terms of time.

  • We have to consider when and for what purposes:

    • People

    • Equipment

    • Material

    • Facilities

  • are used.


Resource Leveling

  • Overallocation must be resolved.

  • Move activities so that resources do not exceed their capacities.

    • Without extending the project duration if possible


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