Operations strategy

Business A2 · Operations management. The idea in plain words, the rules to remember, the mistake to avoid and a worked example, written and checked by Mega Lecture.

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The idea

Operations decisions depend on the resources a business has: the skills of its workers, the finance available and the demand forecast from marketing. IT and AI now help with forecasting, scheduling and maintenance. Operations must also be flexible in volume, delivery time and specification.

Enterprise resource planning (ERP) is one software system with one database that links all departments, so everyone uses the same up-to-date information. Lean production aims to cut every kind of waste while keeping quality high.

Large projects are planned with a network diagram. Critical path analysis finds the longest path through the network. That path gives the minimum project duration, and its activities cannot be delayed.

Rules to remember

Lean production: producing with the minimum of waste (time, materials, inventory, defects, movement).
Kaizen: continuous improvement through many small changes suggested by workers. Quality circles: small groups of workers who meet to solve quality problems.
JIT: materials arrive and goods are made only when needed, so inventory is close to zero; it needs reliable suppliers.
Cell production: small teams each make a complete unit. Simultaneous engineering: development stages done at the same time to cut time to market.
Critical path: the longest path through the network; its length is the minimum project duration and its activities have zero float.
total float = latest finish time − duration − earliest start time
free float = earliest start time of the next activity − duration − earliest start time of this activity

Common mistake

Students choose the shortest path as the critical path. The critical path is the longest path, because every activity must be finished before the project is complete.

Worked example

A project has activities A (3 days), B (6 days), C (4 days, after A), D (5 days, after B), E (2 days, after C) and F (4 days, after D and E). Find the minimum duration, the critical path and the total float of C.

Path A → C → E → F = 3 + 4 + 2 + 4 = 13 days. Path B → D → F = 6 + 5 + 4 = 15 days.
The longest path is B → D → F, so the minimum duration is 15 days and F cannot start before day 11 (6 + 5).
E must finish by day 11, so C must finish by day 11 − 2 = day 9. C can start at day 3.
Total float of C = latest finish − duration − earliest start = 9 − 4 − 3 = 2 days.

Answer: Minimum duration 15 days; critical path B → D → F; total float of C = 2 days.

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