MANAGEMENT SCIENCE

UNIT – III
INTRODUCTION TO PERT / CPM
Introduction:
This project management is extremely interesting and important for two reasons. One, it is so
simple that it can be applied in our day-to-day life to plan our schedules, review our plans, monitor the
progress, and control the performance. Project managers of construction works or software assignments, for
instance, these techniques immensely useful.
Introduction to CPM / PERT Techniques
CPM/PERT or Network Analysis as the technique is sometimes called, developed along two parallel streams,
one industrial and the other military.

CPM (Critical Path Method) - was the discovery of M.R.Walker of E.I.Du Pont de Nemours & Co. and
J.E.Kelly of Remington Rand, circa 1957. The computation was designed for the UNIVAC-I computer. The
first test was made in 1958, when CPM was applied to the construction of a new chemical plant. In March
1959, the method was applied to maintenance shut-down at the Du Pont works in Louisville, Kentucky.
Unproductive time was reduced from 125 to 93 hours.

PERT (Project Evaluation and Review Technique) - was devised in 1958 for the POLARIS missile program
by the Program Evaluation Branch of the Special Projects office of the U.S.Navy, helped by the Lockheed
Missile Systems division and the Consultant firm of Booz-Allen & Hamilton. The calculations were so
arranged so that they could be carried out on the IBM Naval Ordinance Research Computer (NORC) at
Dahlgren, Virginia.
The methods are essentially network-oriented techniques using the same principle.
PERT and CPM are basically time-oriented methods in the sense that they both lead to determination of a time
schedule for the project. The significant difference between two approaches is that the time estimates for the
different activities in CPM were assumed to be deterministic while in PERT these are described
probabilistically. These techniques are referred as project scheduling techniques.

In CPM activities are shown as a network of precedence relationships using activity-on- node network
construction
 Single estimate of activity time
 Deterministic activity times

USED IN: Production management - for the jobs of repetitive in nature where the activity time estimates can
be predicted with considerable certainty due to the existence of past experience.

In PERT activities are shown as a network of precedence relationships using activity-on- arrow
network construction
 Multiple time estimates
 Probabilistic activity times

USED IN: Project management - for non-repetitive jobs (research and development work), where the time
and cost estimates tend to be quite uncertain. This technique uses probabilistic time estimates.
Benefits of PERT/CPM:
 Useful at many stages of project management
 Mathematically simple
 Give critical path and slack time
 Provide project documentation
 Useful in monitoring costs
Limitations of PERT/CPM
 Clearly defined, independent and stable activities

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 Specified precedence relationships
 Over emphasis on critical paths
Applications of CPM / PERT
These methods have been applied to a wide variety of problems in industries
and have found acceptance even in government organizations. These include
 Construction of a dam or a canal system in a region
 Construction of a building or highway
 Maintenance or overhaul of airplanes or oil refinery
 Space flight
 Cost control of a project using PERT / COST
 Designing a prototype of a machine
 Development of supersonic planes

Basic Steps in PERT / CPM

Project scheduling by PERT / CPM consist of four main steps:
a) Planning :
 The planning phase is started by splitting the total project in to small projects. These smaller
projects in turn are divided into activities and are analyzed by the department or section.
 The relationship of each activity with respect to other activities are defined and established and
the corresponding responsibilities and the authority are also stated.
 Thus the possibility of overlooking any task necessary for the completion of the project is
reduced substantially.
b) Scheduling:
 The ultimate objective of the scheduling phase is to prepare a time chart showing the start and
finish times for each activity as well as its relationship to other activities of the project.
 Moreover the schedule must pinpoint the critical path activities which require special attention if
the project is to be completed in time.
 For non-critical activities, the schedule must show the amount of slack or float times which can
be used advantageously when such activities are delayed or when limited resources are to be
utilized effectively.
c) Allocating of resources:
 Allocation of resources is performed to achieve the desired objective. A resource is a physical
variable such as labour, finance, equipment and space which will impose a limitation on time for
the project.
 When resources are limited and conflicting, demands are made for the same type of resources a
systematic method for allocation of resources become essential.
 Resource allocation usually incurs a compromise and the choice of this compromise depends on
the judgment of managers.
d) Controlling:
 The final phase in project management is controlling. Critical path methods facilitate the
application of the principle of management by expectation to identify areas that are critical to
the completion of the project.
 By having progress reports from time to time and updating the network continuously, a better
financial as well as technical control over the project is exercised.
 Arrow diagrams and time charts are used for making periodic progress reports. If required, a
new course of action is determined for the remaining portion of the project.

The Framework for PERT and CPM:

Essentially, there are six steps which are common to both the techniques. The procedure is listed below:
 Define the Project and all of its significant activities or tasks. The Project (made up of several tasks)
should have only a single start activity and a single finish activity.

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 Develop the relationships among the activities. Decide which activities must precede and which must
follow others.
 Draw the "Network" connecting all the activities. Each Activity should have unique event numbers.
Dummy arrows are used where required to avoid giving the same numbering to two activities.
 Assign time and/or cost estimates to each activity.
 Compute the longest time path through the network. This is called the critical path.
 Use the Network to help plan, schedule, and monitor and control the project.

The Key Concept used by CPM/PERT is that a small set of activities, which make up the
longest path through the activity network control the entire project. If these "critical" activities could be
identified and assigned to responsible persons, management resources could be optimally used by
concentrating on the few activities which determine the fate of the entire project.

Non-critical activities can be replanned, rescheduled and resources for them can be reallocated flexibly,
without affecting the whole project.

NETWORK ANALYSIS
Network: It is a graphical representation of projects operations from starting to completion. it is composed of
activities. (Or) This is the combination of activities, dummy activities, and events in a logical sequence,
according to the rules for drawing networks.
Network analysis: Network analysis refers to number of techniques for the planning and control of complex
projects. “The basis of network planning is the representation of sequential relationship between activities by
means of a network of lines and circles”.
 The idea is to link the various activities in such a way that the overall time spent on the project is kept to
a minimum.
 Network analysis (or) network scheduling is a technique used for planning and scheduling large projects
in the fields of construction, maintenance, fabrication, purchase, computer system installation, research
and development designs etc.,
 Network analysis helps in designing, planning, coordinating, controlling and decision making in order to
accomplish the project economically in the minimum available time with the limited available resources.
Objectives of Network Analysis:
 Develops powerful coordinating tool for planning, scheduling, & controlling of projects.
 Effective utilization of resources.
 Minimization of idle resources.
 Minimization of production delays.
 Provides a comprehensive idea of the project.

Applications of network analysis:

 The construction of buildings, bridges, factories, highways, stadiums, irrigation projects etc.
 Budget and auditing procedures.
 Installation of large computers and machinery.
 Advertisement programmes and for launching a new product.
 Research and development
 Preparing inventory plans.
 Organization of big public work, conferences etc.,
Advantages of network analysis:
 They provide a logical picture of the layout & sequence of a complex project.
 They help to identify the activities and events which are critical to the entire project.
 They provide a basis for working out times, cost and resources involved in the project.

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Network Diagram Representation
In a network representation of a project certain definitions are used
1) Activity: Any individual operation which utilizes resources and has an end and a beginning is called
activity. An arrow is commonly used to represent an activity with its head indicating the direction of
progress in the project. These are classified into four categories
i. Predecessor activity – Activities that must be completed immediately prior to the start of another activity
are called predecessor activities.
ii. Successor activity – Activities that cannot be started until one or more of other activities are completed but
immediately succeed them are called successor activities.
iii. Concurrent activity – Activities which can be accomplished concurrently are known as concurrent
activities. It may be noted that an activity can be a predecessor or a successor to an event or it may be
concurrent with one or more of other activities.
iv. Dummy activity – An activity which does not consume any kind of resource but merely depicts the
technological dependence is called a dummy activity.
The dummy activity is inserted in the network to clarify the activity pattern in the
following two situations
 To make activities with common starting and finishing points distinguishable
 To identify and maintain the proper precedence relationship between activities that is not connected by
events.
For example, consider a situation where A and B are concurrent activities. C is dependent on A
and D is dependent on A and B both. Such a situation can be handled by using a dummy activity as shown in
the figure.

2) Event: An event represents a point in time signifying the completion of some activities and the
beginning of new ones. This is usually represented by a circle in a network which is also called a
node or connector.
The events are classified in to three categories
i. Merge event – When more than one activity comes and joins an event such an event is known as merge
event.
ii. Burst event – When more than one activity leaves an event such an event is known as burst event.
iii. Merge and Burst event – An activity may be merge and burst event at the same time as with respect to
some activities it can be a merge event and with respect to some other activities it may be a burst event.

3) Sequencing: The first prerequisite in the development of network is to maintain the precedence
relationships. In order to make a network, the following points should be taken into considerations.
 What job or jobs precede it?
 What job or jobs could run concurrently?
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 What job or jobs follow it?
 What controls the start and finish of a job?
Since all further calculations are based on the network, it is necessary that a network be drawn with
full care.
Rules for Drawing Network Diagram
Rule 1 : Each activity is represented by one and only one arrow in the network

Rule 2 : No two activities can be identified by the same end events

Rule 3: In order to ensure the correct precedence relationship in the arrow diagram, following questions
must be checked whenever any activity is added to the network
 What activity must be completed immediately before this activity can start?
 What activities must follow this activity?
 What activities must occur simultaneously with this activity?

In case of large network, it is essential that certain good habits be practiced to draw an easy to
follow network
 Try to avoid arrows which cross each other
 Use straight arrows
 Do not attempt to represent duration of activity by its arrow length
 Use arrows from left to right. Avoid mixing two directions, vertical and standing arrows may
be used if necessary.
 Use dummies freely in rough draft but final network should not have any redundant
dummies.
 The network has only one entry point called start event and one point of emergence called
the end event.
Common Errors in Drawing Networks
The three types of errors are most commonly observed in drawing network diagrams
a) Dangling : To disconnect an activity before the completion of all activities in a network diagram is
known as dangling. As shown in the figure activities (5 – 10) and (6 – 7) are not the last activities in the
network. So the diagram is wrong and indicates the error of dangling

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b) Looping or Cycling : Looping error is also known as cycling error in a network diagram. Drawing an

endless loop in a network is known as error of looping as shown in the following figure.
c) Redundancy : Unnecessarily inserting the dummy activity in network logic is known as the error
of redundancy as shown in the following diagram

Advantages and Disadvantages

PERT/CPM has the following advantages

 A PERT/CPM chart explicitly defines and makes visible dependencies (precedence

relationships) between the elements,
 PERT/CPM facilitates identification of the critical path and makes this visible,
 PERT/CPM facilitates identification of early start, late start, and slack for each activity,
 PERT/CPM provides for potentially reduced project duration due to better understanding of
dependencies leading to improved overlapping of activities and tasks where feasible.

PERT/CPM has the following disadvantages:

 There can be potentially hundreds or thousands of activities and individual dependency

relationships,
 The network charts tend to be large and unwieldy requiring several pages to print and
requiring special size paper,
 The lack of a timeframe on most PERT/CPM charts makes it harder to show status although
colours can help (e.g., specific colour for completed nodes),
 When the PERT/CPM charts become unwieldy, they are no longer used to manage the
project.
Critical Path in Network Analysis

Basic Scheduling Computations

The notations used are
(i, j) = Activity with tail event i and head event j
Ei = Earliest occurrence time of event i
Lj = Latest allowable occurrence time of event j
Dij = Estimated completion time of activity (i, j)

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(Es)ij = Earliest starting time of activity (i, j)
(Ef)ij = Earliest finishing time of activity (i, j)
(Ls)ij = Latest starting time of activity (i, j)
(Lf)ij = Latest finishing time of activity (i, j)

The procedure is as follows

A. Determination of Earliest time (Ej): Forward Pass computation:
i. Step 1 : The computation begins from the start node and move towards the end node.
For easiness, the forward pass computation starts by assuming the earliest occurrence
time of zero for the initial project event.
ii. Step 2 :
 Earliest starting time of activity (i, j) is the earliest event time of the tail end
event i.e. (Es)ij = Ei
 Earliest finish time of activity (i, j) is the earliest starting time + the activity
time i.e. (Ef)ij = (Es)ij + Dij or (Ef)ij = Ei + Dij
 Earliest event time for event j is the maximum of the earliest finish times of all
activities ending in to that event i.e. Ej = max [(Ef)ij for all immediate predecessor of
(i, j)] or Ej =max [Ei + Dij]
B. Backward Pass computation (for latest allowable time):
i. Step 1 : For ending event assume E = L. Remember that all E’s have been computed by
forward pass computations.
ii. Step 2 : Latest finish time for activity (i, j) is equal to the latest event time of event j i.e. (Lf)ij
= Lj
iii. Step 3 : Latest starting time of activity (i, j) = the latest completion time of (i, j) – the activity
time or (Ls)ij =(Lf)ij - Dij or (Ls)ij = Lj - Dij
iv. Step 4 : Latest event time for event ‘i’ is the minimum of the latest start time of all activities
originating from that event i.e. Li = min [(Ls)ij for all immediate successor of (i, j)] = min
[(Lf)ij - Dij] = min [Lj - Dij]
C. Determination of floats and slack times :
There are three kinds of floats
i. Total float – The amount of time by which the completion of an activity could be delayed
beyond the earliest expected completion time without affecting the overall project duration
time.
Mathematically
(Tf)ij = (Latest start – Earliest start) for activity ( i – j) (Tf)ij =
(Ls)ij - (Es)ij or (Tf)ij = (Lj - Dij) - Ei
ii. Free float – The time by which the completion of an activity can be delayed beyond the
earliest finish time without affecting the earliest start of a subsequent activity.
Mathematically
(Ff)ij = (Earliest time for event j – Earliest time for event i) – Activity time for ( i,j)
(Ff)ij = (Ej - Ei) - Dij
iii. Independent float – The amount of time by which the start of an activity can be delayed
without effecting the earliest start time of any immediately following activities, assuming that
the preceding activity has finished at its latest finish time.
Mathematically
(If)ij = (Ej - Li) - Dij
The negative independent float is always taken as zero.

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iv. Event slack - It is defined as the difference between the latest event and earliest event
times.
Mathematically
Head event slack = Lj – Ej, Tail event slack = Li - Ei
D. Determination of critical path:
i. Critical event – The events with zero slack times are called critical events. In other words the
event i is said to be critical if Ei = Li
ii. Critical activity – The activities with zero total float are known as critical activities. In other
words an activity is said to be critical if a delay in its start will cause a further delay in the
completion date of the entire project.
iii. Critical path – The sequence of critical activities in a network is called critical path. The
critical path is the longest path in the network from the starting event to ending event and
defines the minimum time required to complete the project.

Worked Examples on CPM

Example 1
Determine the early start and late start in respect of all node points and identify critical path for
the following network.

Solution
Calculation of E and L for each node is shown in the network

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Network Analysis Table
Normal Earliest Time Late Time
Activity(i, Time st Float Time
j) (Dij) Start Finish Start Finish (Li - Dij ) - Ei

(Ei) (Ei + Dij ) (Li - Dij ) (Li)

(1, 2) 10 0 10 0 10 0
(1, 3) 8 0 8 1 9 1
(1, 4) 9 0 9 1 10 1
(2, 5) 8 10 18 10 18 0
(4, 6) 7 9 16 10 17 1
(3, 7) 16 8 24 9 25 1
(5, 7) 7 18 25 18 25 0
(6, 7) 7 16 23 18 25 2
(5, 8) 6 18 24 18 24 0
(6, 9) 5 16 21 17 22 1
(7, 10) 12 25 37 25 37 0
(8, 10) 13 24 37 24 37 0
(9, 10) 15 21 36 22 37 1

From the table, the critical nodes are (1, 2), (2, 5), (5, 7), (5, 8), (7, 10) and (8, 10)

From the table, there are two possible critical paths

i. 1 → 2 → 5 → 8 → 10
ii. 1 → 2 → 5 → 7 → 10
Example 2
Find the critical path and calculate the slack time for the following network

Solution
The earliest time and the latest time are obtained below

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Normal Earliest Time Late Time
Activity(i, j) Time st Float Time
(Dij) Start Finish Start Finish (Li - Dij ) - Ei

(Ei) (Ei + Dij ) (Li - Dij ) (Li)

(1, 2) 2 0 2 5 7 5
(1, 3) 2 0 2 0 2 0
(1, 4) 1 0 1 6 7 6
(2, 6) 4 2 6 7 11 5
(3, 7) 5 2 7 3 8 1
(3, 5) 8 2 10 2 10 0
(4, 5) 3 1 4 7 10 6
(5, 9) 5 10 15 10 15 0
(6, 8) 1 6 7 11 12 5
(7, 8) 4 7 11 8 12 1
(8, 9) 3 11 14 12 15 1

From the above table, the critical nodes are the activities (1, 3), (3, 5) and (5, 9)

The critical path is 1 → 3 → 5 → 9

Example 3
A project has the following times schedule
Activity Times in weeks Activity Times in weeks
(1 – 2) 4
(5 – 7) 8
(1 – 3) 1
(2 – 4) 1 (6 – 8) 1
(3 – 4) 1 (7 – 8) 2
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(3 – 5) 6 (8 – 9) 1
(4 – 9) 5
(8 – 10) 8
(5 – 6) 4
(9 – 10) 7
Construct the network and compute
1. TE and TL for each event
2. Float for each activity
3. Critical path and its duration
Solution
The network is

Event No.: 1 2 3 4 5 6 7 8 9 10
TE: 0 4 1 5 7 11 15 17 18 25
TL: 0 12 1 13 7 16 15 17 18 25
Float = TL (Head event) – TE (Tail event) – Duration

Activity Duration TE (Tail event) TL (Head event) Float

(1 – 2) 4 0 12 8
(1 – 3) 1 0 1 0
(2 – 4) 1 4 13 8
(3 – 4) 1 1 13 11
(3 – 5) 6 1 7 0
(4 – 9) 5 5 18 8
(5 – 6) 4 7 16 5
(5 – 7) 8 7 15 0
(6 – 8) 1 11 17 5
(7 – 8) 2 15 17 0
(8 – 9) 1 17 18 0
(8 – 10) 8 17 25 0
(9 – 10) 7 18 25 0

The resultant network shows the critical path

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The two critical paths are

i. 1 → 3 → 5 →7 → 8 → 9 →10
ii. 1 → 3 → 5 → 7 → 8 →10
Project Evaluation and Review Technique (PERT)
The main objective in the analysis through PERT is to find out the completion for a particular event
within specified date. The PERT approach takes into account the uncertainties. The three time
values are associated with each activity

1. Optimistic time – It is the shortest possible time in which the activity can be finished. It
assumes that everything goes very well. This is denoted by t0.
2. Most likely time – It is the estimate of the normal time the activity would take. This
assumes normal delays. If a graph is plotted in the time of completion and the frequency
of completion in that time period, then most likely time will represent the highest frequency
of occurrence. This is denoted by tm.
Pessimistic time – It represents the longest time the activity could take if everything goes
wrong. As in optimistic estimate, this value may be such that only one in hundred or one
in twenty will take time longer than this value. This is denoted by tp.

In PERT calculation, all values are used to obtain the percent expected value.

1. Expected time – It is the average time an activity will take if it were to be repeated on large
number of times and is based on the assumption that the activity time follows Beta
distribution, this is given by
te = ( t0 + 4 tm + tp ) / 6

2. The variance for the activity is given by

σ2 = [(tp – to) / 6] 2
Worked Examples
Example 1
For the project

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Task: A B C D E F G H I J K

Least time: 4 5 8 2 4 6 8 5 3 5 6
Greatest time: 8 10 12 7 10 15 16 9 7 11 13
Most likely time: 5 7 11 3 7 9 12 6 5 8 9
Find the earliest and latest expected time to each event and also critical path in the network.
Solution
Greatest time Most likely Expected time
Task Least time(t0)
(tp) time (tm) (to + tp + 4tm)/6
A 4 8 5 5.33
B 5 10 7 7.17
C 8 12 11 10.67
D 2 7 3 3.5
E 4 10 7 7
F 6 15 9 9.5
G 8 16 12 12
H 5 9 6 6.33
I 3 7 5 5
J 5 11 8 8
K 6 13 9 9.17

Expected Start Finish

Task Total
time (te) Earliest Latest Earliest Latest float
A 5.33 0 0 5.33 5.33 0
B 7.17 0 8.83 7.17 16 8.83
C 10.67 5.33 5.33 16 16 0
D 3.5 0 10 3.5 13.5 10
E 7 16 16 23 23 0
F 9.5 3.5 13.5 13 23 10

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G 12 3.5 18.5 15.5 30.5 15
H 6.33 23 23 29.33 29.33 0
I 5 23 25.5 28 30.5 2.5
J 8 28 30.5 36 38.5 2.5
K 9.17 29.33 29.33 31.5 38.5 0

The network is

The critical path is A →C →E → H → K

Example 2
A project has the following characteristics
Most optimistic time Most pessimistic time Most likely time
Activity
(a) (b) (m)
(1 – 2) 1 5 1.5
(2 – 3) 1 3 2
(2 – 4) 1 5 3
(3 – 5) 3 5 4
(4 – 5) 2 4 3
(4 – 6) 3 7 5
(5 – 7) 4 6 5
(6 – 7) 6 8 7
(7 – 8) 2 6 4
(7 – 9) 5 8 6

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(8 – 10) 1 3 2
(9 – 10) 3 7 5

Construct a PERT network. Find the critical path and variance for each event.
Solution
te v
Activity (a) (b) (m) (4m)
(a + b + 4m)/6 [(b – a) / 6]2
(1 – 2) 1 5 1.5 6 2 4/9
(2 – 3) 1 3 2 8 2 1/9
(2 – 4) 1 5 3 12 3 4/9
(3 – 5) 3 5 4 16 4 1/9
(4 – 5) 2 4 3 12 3 1/9
(4 – 6) 3 7 5 20 5 4/9
(5 – 7) 4 6 5 20 5 1/9
(6 – 7) 6 8 7 28 7 1/9
(7 – 8) 2 6 4 16 4 4/9
(7 – 9) 5 8 6 24 6.17 1/4
(8 – 10) 1 3 2 8 2 1/9
(9 – 10) 3 7 5 20 5 4/9

The network is constructed as shown below

The critical path = 1 → 2 → 4 → 6 → 7 →9 →10

Example 3

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Calculate the variance and the expected time for each activity

Solution
te v
Activity (to) (tm) (tp)
(to + tp + 4tm)/6 [(tp – to) / 6]2
(1 – 2) 3 6 10 6.2 1.36
(1 – 3) 6 7 12 7.7 1.00
(1 – 4) 7 9 12 9.2 0.69

(2 – 3) 0 0 0 0.0 0.00

(2 – 5) 8 12 17 12.2 2.25

(3 – 6) 10 12 15 12.2 0.69

(4 – 7) 8 13 19 13.2 3.36

(5 – 8) 12 14 15 13.9 0.25

(6 – 7) 8 9 10 9.0 0.11

(6 – 9) 13 16 19 16.0 1.00

(8 – 9) 4 7 10 7.0 1.00

(7 – 10) 10 13 17 13.2 1.36

(9 – 11) 6 8 12 8.4 1.00

(10 – 11) 10 12 14 12.0 0.66

Example 4
A project is represented by the network as shown below and has the following data

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Task: A B C D E F G H I

Least time: 5 18 26 16 15 6 7 7 3
Greatest time: 10 22 40 20 25 12 12 9 5

Most likely 15 20 33 18 20 9 10 8 4
time:

Determine the following

1. Expected task time and their variance

2. Earliest and latest time

Solution:
1. Expected task time and their variance
Least time Greatest time Most likely Expected time Variance
Activity
(t0) (tp) time (tm) (to + tp + 4tm)/6 (σ2)
(1-2) 5 10 8 7.8 0.69
(1-3) 18 22 20 20.0 0.44
(1-4) 26 40 33 33.0 5.43
(2-5) 16 20 18 18.0 0.44
(2-6) 15 25 20 20.0 2.78
(3-6) 6 12 9 9.0 1.00
(4-7) 7 12 10 9.8 0.69
(5-7) 7 9 8 8.0 0.11
(6-7) 3 5 4 4.0 0.11

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2. Earliest and latest time
Earliest time
E1 = 0
E2 = 0 +7.8 = 7.8
E3 = 0 +20 = 20
E4 = 0 +33 = 33
E5 = 7.8 + 18 = 25.8
E6 = max [7.8 + 20, 20 + 9] = 29
E7 = max [33 + 9.8, 25.8 + 8, 29 + 4] = 42.8
Latest time
L7 = 42.8
L6 = 42.8 – 4 = 38.8
L5 = 42.8 – 8 = 34.3
L4 = 42.8 – 9.8 = 33
L3 = 38.8 – 9 = 29.8
L2 = min [34.8 – 18, 38.8 – 20] = 16.8
L1 = min [16.8 – 7.8, 29.8 – 20, 33 - 33] = 0
1. For the following data, draw network. Find the critical path, slack time after
calculating the earliest expected time and the latest allowable time

Activity Duration Activity Duration

(1 – 2) 5 (5 – 9) 3
(1 – 3) 8 (6 – 10) 5
(2 – 4) 6 (7 – 10) 4
(2 – 5) 4 (8 – 11) 9
(2 – 6) 4 (9 – 12) 2
(3– 7) 5 (10 – 12) 4
(3 – 8) 3 (11 – 13) 1
(4 – 9) 1 (12 – 13) 7

[Ans. Critical path: 1 → 3 → 7 → 10 → 12 →13]

2. A project schedule has the following characteristics

Activity Most optimistic time Most likely time Most pessimistic time

(1 – 2) 1 2 3
(2 – 3) 1 2 3
(2 – 4) 1 3 5
(3 – 5) 3 4 5
(4 – 5) 2 5 4

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(4 – 6) 3 5 7
(5 – 7) 4 5 6
(6 – 7) 6 7 8
(7 – 8) 2 4 6

(7 – 9) 4 6 8

(8 – 10) 1 2 3

(9 – 10) 3 5 7

Construct a PERT network and find out

a) The earliest possible time
b)Latest allowable time
c) Slack values
d)Critical path
3. Explain the following terms
a. optimistic time
b. Most likely time
c. Pessimistic time
d. Expected time
e. Variance
4. Calculate the variance and the expected time for each activity

Time estimates of PERT: In PERT three time estimates are used to calculate they are as follows:
a) Optimistic time (to): the time for completing an activity if all goes well / under ideal conditions
used in PERT.
b) Pessimistic time (tp): It is the time which an activity will take to complete if every thing
goes wrong, used in PERT.
c) Most likely time (tm): The time taken for completing an activity, under normal conditions.
This is the consensus best estimate, PERT. It lies between the optimistic time and pessimistic

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time.
d) Expected time (Te): Expected time or average time (Te) for an activity to calculate by
combining statistically all the three time estimates to, tp, and tm.

Formula: Te = to + 4tm+ tp

e) Variance: It is a measure of the dispersion. Larger the variance, greater will be the uncertainty.

Formula: = tp – to
6

Applications of PERT:
 Research and development.
 Marketing programmes and advertising programmes.
 Defense projects.
 Installation of machinery.
 Construction programmes.
 Instituting inventory control.
Advantages of PERT:
 It forces managers and subordinate managers to make a plan for production because time event
analysis is quite impossible without planning and seeing how the piece fit together.
 PERT encourages management control by exception. It concentrates attention on critical
elements that may need correction.
 It provides graphic display of activities and identifies critical activities and slack activities.
 It enables forward-working control as a delay will affect the succeeding events and possibly the
whole project. The production manger can somehow make up the time by shortening that of some
other event.
 The network system with its sub-systems creates a pressure for action at the right spot and level
and at the time.
 PERT can be effectively used for rescheduling the activities.
Limitations of PERT:
 It is a time-consuming and expensive technique.
 It is based on beta distribution and the assumption of beta distribution may not always be true.
 PERT is not suitable when programme is not precise and a reasonable estimate of time schedule is
not possible.
 It is not useful for routine planning of recurring events such as mass production because once a
repetitive sequence worked out; elaborate and continuing control is not required.
 The expected time and the corresponding variance are only estimated values.
 Important activities may be omitted or the precedence relationships may not be correct.

Differences between CPM and PERT:

PERT CPM
A probabilistic model with uncertainty activity A deterministic model with well-known
duration. activity.
Approach is event-oriented. Approach is activity-oriented.
Uses words like network diagram, event and Employs words like arrow diagram, nodes and

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slack. floats.
Dummy activities are used to represent proper Dummy activities are not necessary for
sequencing. usage. The arrow diagram thus becomes
slightly
simpler.
Does not democrat between critical and non- Marks critical activities.
critical activities.
Find application in all those projects where Find application in all those projects
resources are always made available as and where overall costs are of primary
when required. importance.
Suitable especially in defense projects and Suitable for problem in industrial settings plant
research and development where the activity maintenance, civil constructions projects.
times cannot be readily predicated.
It has three- times estimates i.e.., It has one-time estimate.
Optimistic time(to), Most Likely time (TM)
, and
Pessimistic Time (TP)
It is a control device. It is a planning device.

Probability of Completing the Project:

By using probability of distribution the probability of completing the project by schedule time is given as:
(TL - TE)
Normal deviate (Z) =


Here Z = Normal deviate.

 = Standard deviation of the entire network.
TL = Given estimate time of the project.
TE = Expected time of the project.

Determine the square root of the sum of variances. This gives the standard deviation for entire project.
(i.e. calculate the standard deviation for critical path by using the standard deviation for each
activity.)
 By applying the Normal deviate formula we get probability of completing the project within the
given time.
Note: We get the value of the normal deviate. This should not be within a range of + / - 3 sigma limits.

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 To arrive the % of probability of completing the project within the given time, the value of the
normal deviate has to be converted in to the value of probability by using the table of normal
distribution function table. Thus, the probability completing the project is determined.

PROJECT CRASHING:
In PERT / CPM network techniques, time is related to cost and the objective is to develop
optimum time – cost relationship. The ultimate objective of the network techniques is not only to bring
improvement in planning scheduling and controlling of the project but also to assess possibility of arriving
at a feasible desirable time – cost relationship.
The policy of any organization is to reduce the target time so that time saved can be utilized for additional
product or otherwise.
The overall project duration can be minimized by reducing the duration of only the critical
activities of the project network. To reduce the schedule time, non – critical activities can be considered as
potential point of resources for diverting to critical activities.
The duration of the project can be shortened by systematic analysis of critical path activities,
crashing cost and corresponding cost effect of indirect costs.
Formula: Cost Slope = Crash Cost – Normal Cost
Normal Time – Crash Time
Increase Cost = Crash Cost – Normal Cost.
Decrease in Time = Normal Time – Crash Time.

Terms in Crashing:

a) Normal cost: It is lowest cost of completing an activity in the minimum time, employing normal
means i.e. not using over time or other special resources. Or the expenditure incurred on normal
resources for completing any activity in normal time is known as normal cost.
b) Normal cost: It is the minimum time required to achieve the normal cost. Normal time is associated
with the normal resources of the organization to perform the activity.
c) Crash cost: It is the least cost of completing an activity by employing all possible means like
overtime, additional machinery, proper materials, etc. Or the total expenditure incurred on
additional resources for crashing the time is known as “crash cost”.
d) Crash time: Crash time is the minimum possible time in which an activity can be completed by
employing extra resources. Crash time is the time beyond which the activity cannot be shortened by
any amount of increase in resources.
e) Cost Slope: The term cost slope is defined as the “increase in the cost of the activity per unit
decrease in the time.
Mathematically the time – cost relationship can be represented as:
Cost Slope = Crash Cost – Normal Cost
Normal Time – Crash Time

PROJECT COSTS:
The total project cost is the sum of direct and indirect costs. Indirect cost consists of overheads,
depreciation, insurance, supervisory cost etc.
a) Direct costs: costs, like manpower, material, etc incurred for project execution. This cost is directly
proportional to the quality of resources involved during a period. Direct costs are more in crash time.

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b) Indirect costs: Cost consists of overheads, depreciation, insurance, supervisor’s salaries, rent, and
establishment charges etc. these costs are directly proportionate to the duration of the project.

A project has activities with the following normal and crash times and cost:

Determine a crashing scheme for the above project so that the total project time is reduced by 3 weeks.

Solution

We have the following network diagram for the given project with normal costs:

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Therefore Path II is the critical path and the critical activities are A, C, E, G and H. The non-critical activities
are B, D and F.

Given that the normal time of activity A is 4 weeks while its crash time is 3 weeks. Hence the time of this
activity can be reduced by one week if the management is prepared to spend an additional amount. However,
the time cannot be reduced by more than one week even if the management may be prepared to spend more
money. The normal cost of this activity is Rs. 8,000 whereas the crash cost is Rs. 9,000. From this, we see that
crashing of activity A by one week will cost the management an extra amount of Rs. 1,000. In a similar
fashion, we can work out the crash cost per unit time for the other activities also. The results are provided in the
following table.

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A non-critical activity can be delayed without delaying the execution of the whole project. But, if a critical
activity is delayed, it will delay the whole project. Because of this reason, we have to select a critical activity
for crashing. Here we have to choose one of the activities A, C, E, G and H The crash cost per unit time works
out as follows:

Rs. 1,000 for A; Rs. 1,000 for C; Rs. 1,000 for E; Rs. 6,000 for G; Rs. 3,000 for H.

The maximum among them is Rs. 1,000. So we have to choose an activity with Rs.1,000 as the crash cost per
unit time. However, there is a tie among A, C and E. The tie can be resolved arbitrarily. Let us select A for
crashing. We reduce the time of A by one week by spending an extra amount of Rs. 1,000.

After this step, we have the following network with the revised times for the activities:

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The revised time for Path I = 3 + 5 + 6 + 5 = 19 weeks.

The time for Path II = 3 + 4 + 6 + 7 + 4 = 24 weeks.

Maximum of {19, 24} = 24.

Therefore Path II is the critical path and the critical activities are A, C, E, G and H. However, the time for A
cannot be reduced further. Therefore, we have to consider C, E, G and H for crashing. Among them, C and E
have the least crash cost per unit time. The tie between C and E can be resolved arbitrarily. Suppose we reduce
the time of C by one week with an extra cost of Rs. 1,000.

After this step, we have the following network with the revised times for the activities:

The time for Path I = 3 + 5 + 6 + 5 = 19 weeks.

The time for Path II = 3 + 3 + 6 + 7 + 4 = 23 weeks.

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Maximum of {19, 23} = 23.

Therefore Path II is the critical path and the critical activities are A, C, E, G and H. Now the time for A or C
cannot be reduced further. Therefore, we have to consider E, G and H for crashing. Among them, E has the
least crash cost per unit time. Hence we reduce the time of E by one week with an extra cost of Rs. 1,000.

By the given condition, we have to reduce the project time by 3 weeks. Since this has been accomplished, we
stop with this step.

Result: We have arrived at the following crashing scheme for the given project:

Reduce the time of A, C and E by one week each.

Project time after crashing is 22 weeks.

Extra amount required = 1,000 + 1,000 + 1,000 = Rs. 3,000.

INSPECTION AND QUALITY CONTROL

Introduction:
Quality of product is always a matter of concern for all manufacturing firms because in the
changing scenario need for quality control has taken a front seat. Traditional quality control was designed to
prevent the production of products that do not meet certain acceptance criteria. This could be accomplished by
performing inspection on products that, in many cases, have already been produced. Action could then be taken
by rejecting those products. Some products would go onto be reworked, it is expensive, and time consuming.
Then quality concept was introduced.
Definition:
Quality refers to the sum of the attributes or properties that describe a product. These are generally
expressed in terms of specific product characteristics such as length, width, colour and so on.,
Quality as a concept can be subdivided in to : i)quality of design and ii)quality of conformance.
Quality of design is determined by the extent to which products and services are designed with the needs and
desires of the customers in mind.
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Quality of conformance is determined by the extent to which the intent of the designer is actually built into
the product or service.
Different types of QC inspections
Depending on your product and industry, you’ll need a certain inspection service when searching for quality
solutions. But there are some common one you should definitely know about if you’re in the business of trade
and manufacturing.

Below is a selection and along with their respective role of inspection in quality control explain. Types of
inspection and methods of quality control inspections differ for a reason so it’s good to know the details.

1. Sample Checking
Sample checks involve selecting a small number of items from a bigger batch or lot to check a range of
their specifications such as appearance, workmanship, safety, functions, etc. prior to mass production.
Basically, a sample of the products are extracted from the bunch and inspected for quality, rather than
the whole lot.

2. Pre-Production Inspections (PPI)

As the name of this type of inspection suggests, pre-production inspections are carried out before
production begins to assess the quality and quantity of raw materials and components. This type of
inspection is great for when you begin a new relationship with a supplier. You can ensure they are using
the right type of materials for your production and implementing the right processes to deliver the
product you expect.

3. During Production Inspection (DPI)

During production inspections are also sometimes known as DUPRO and these are conducted while the
production is in progress. They are meant for products that are in continuous production and have strict
requirements for on-time shipments and as a follow-up when quality issues are found prior to
manufacturing during pre-production inspection.

4. Pre-Shipment Inspection (PSI)

In short, the meaning of a pre-shipment inspection is that it is a method for checking the quality of
goods before they are shipped. This type of inspection’s purpose is to check that a production aligns
with the specifications of the buyer or purchase order/letter of credit. But at what point is a pre-
shipment inspection conducted exactly?

5. Piece by Piece Inspection (or Sorting Inspection)

This kind of inspection involves thoroughly checking each and every item to evaluate a range of
variables. These can be things such as general appearance, workmanship, function, safety, etc. and
inspections can be done pre- or post-packaging. The Piece by Piece inspections are carried out on 100%
of goods. Upon completion, all products which pass inspection are then sealed and certified with an
HQTS sticker to ensure that every piece included in the shipment meets your specified quality
requirements.

6. Metal Detection
Needles being left in garments can be a serious issue if proper metal detection procedures aren’t carried
out. That’s why metal detection is an essential quality assurance requirement for the garment industry.
Sewn items could have needle fragments or undesirable metallic substances embedded.

7. Loading and unloading supervision

This kind of inspection is the process of monitoring the entire loading and unloading of goods to ensure
your products are handled professionally. Supervision of the whole container loading and uThe
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inspection and supervision process includes an evaluation of the condition of the shipping container,
verification of product information; quantities loaded and unloaded, packaging compliance and overall
supervision of the loading and unloading process. It’s an inspection service that’s signed, sealed and
delivered with quality assurance guaranteed.nloading process to your desired location can be arranged,
wherever you’re shipping to and from.

Types of Inspection in Quality Management

Inspection plays a crucial role in quality management by ensuring that products, processes, and services meet
the required standards and specifications. It involves systematically examining and evaluating various aspects
of a product or process to identify any deviations or defects.

There are numerous types of inspections employed in quality management to address different stages and
aspects of production. Here are ten common types:

1. Receiving Inspection: This type of inspection occurs upon receipt of raw materials, components, or
finished goods to verify their quality and conformance to specifications.

2. In-Process Inspection: Conducted during the manufacturing process, this inspection ensures that
products meet quality standards at each stage and helps identify any potential issues early on.

3. Final Inspection: Performed after the completion of production, it involves a comprehensive

examination of finished products to ensure they meet all quality requirements before they are released
for distribution.

4. First Article Inspection (FAI): Typically applied to the first production run of a new product, FAI
ensures that the initial batch meets all customer requirements and design specifications.

5. Statistical Process Control (SPC): SPC involves continuous monitoring and inspection of a
production process using statistical techniques to identify variations and maintain process stability.

6. Attribute Sampling: This inspection technique involves randomly sampling a batch of products and
determining whether each unit meets a predefined set of criteria or standards.

7. Variable Sampling: In this type of inspection, measurements are taken on randomly selected samples
from a batch, and statistical analysis is used to assess the quality level of the entire batch.

8. 100% Inspection: As the name suggests, every individual item in a batch is inspected thoroughly to
ensure compliance with quality standards. This method is time-consuming and resource-intensive but
guarantees comprehensive scrutiny.

9. Dock Audit: Performed when products are ready for shipping, dock audits involve checking the
accuracy of product quantities, packaging, labeling, and overall shipment quality.

10. Process Audit: This type of inspection focuses on assessing the effectiveness of production processes
and identifying areas for improvement. It involves a systematic review of procedures, documentation,
and adherence to quality standards.

These are just a few examples of the many types of inspections used in quality management. Choosing the
appropriate inspection method depends on the specific requirements of the industry, product, and production
process, aiming to ensure consistent quality and customer satisfaction.

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STATISTICAL QUALITY CONTROL (SQC):
is concerned with quality of conformance. This term is often used inter
changeably with statistical process control (SPC), which involves using statistical techniques to measures and
analyze the variation in processes.
Meaning & Definition of SQC: Statistical Quality Control (SQC) is a method for achieving quality control in
processes. It is a set of methods using statistical tools such as mean, variance and others, to detect whether the
process observed is under control.
History of SQC: Dr.Walter shewart working laid the foundation for statistical quality control in the Bell
Telephone Laboratories in the 1920’s conducting research on methods to improve quality and lower costs. He
developed and introduced the concept of control in 1931 with regard to variation, and came up with statistical
process control charts which provides a simple way to determine if the process is in control or not.
Dr.W.Edwards Deming built up on shewart’s work and took the concept to Japan following WWII. There,
Japanese industry adapted the concepts whole – heartedly. The resulting high quality of Japanese product is
world – renowned. Dr.Deming is famous throughout Japan as a “God of Quality”. Today, SPC is used in
manufacturing facilities around the world.
Objectives of statistical quality control: The main objective of any SQC study is to reduce variations. Any
process can be considered a transformation mechanism of different input factors in to a product or service.
Since inputs exhibit variations, the result is a combined effect of all variations. This, in turn, is translated into
the product.
 Common causes of variation: chance causes of variation are inherent in the process. Chance causes
are reasons for minor variations in the quality characteristics that are inspected. The causes do not cause
the item to be rejected as the variations are within the limits (i.e. tolerance limit).
 Special cause variation, which stems from external sources and indicates that the process is out of
statistical control.
Techniques of SQC:
 Process Control through Control Charts,
 Acceptance sampling.
Quality Control Tools which include: Check sheet, Bar chart and other graphs, Histogram, Control chart.
Procedure of SQC: Proper statistical process control starts with planning and data collection.
The steps followed in the statistical process control are explained with the help of PDSA cycle as described by
Walter Shewart.
 PLAN: Identify the problem and the possible causes. The QC tools described in this manual can help
organizations identify problems and possible causes, and to prioritize corrective actions.
 DO: Make changes designed to correct or improve the situation.
 STUDY: Study the effect of these changes on the situation. This is where control charts are used- they
show the effects of changes on a process over time. Evaluate the results and then replicate the change or
abandon it and try something different.
 ACT: if the result is successful, standardize the changes and then work on further improvements or the
next prioritized problem. If the outcome is not yet successful, look for other ways to change the process
or identify different causes for the problem.
Benefits of SQC :
 Provides surveillance and feedback for keeping processes in control.
 Signals when a problem with the process has occurred.
 Detects as sign able causes of variation
 Accomplishes process characterization
 Reduces need for inspection
 Monitors process quality
 Provides mechanism to make process changes and track effects of those changes.
Statistical Process Control (SPC):
The purpose of SPC is to isolate the natural variation in the process from other sources of variation that can be
traced or whose causes may be identified. There are two different kinds of variation that affect the quality
characteristics of products.
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Definition:
Statistical process control (SPC) is defined as “The application of statistical techniques to
control a process.” Statistical process control is defined as use of tools to observe or monitor the performance
of the production or service process’s tendency to vary in order to predict an outcome that if not corrected may
later result in rejected product BEFORE IT HAPPENS. Thus SPC is known as prevention and prediction tool
for quality.
Tools of statistical process control:
Some of the common statistical process control tools are:
 Control charts.
 Flowcharts.
a) Control charts: Control chart (also called as process control chart or quality control chart) is an
important statistical tool used for the study and control of the repetitive processes. Control charts are the
tools to determine whether the process is under control or out of control. The charts were developed by
“W.A. Shewart”. The main objective of the control chart is to identify process variation and help to
reduce the same.
Control chart is a graphical representation of quality characteristics which indicates whether the process
is in under control or not. It shows whether a sample of data fall within a common or normal range of
variation.
A control chart has upper, lower, and central control limits they are represented as follows:

Types of control charts:

The control charts are mainly two types:
A. Control charts for variables (measurement charts): Variable control charts are used to control
measurable quality characteristics like hardness, thickness, length, and so on. Variable control charts are
of following types :
i. X chart (Mean chart): An X chart is used if the quality of output is measured in term sofa variable such
as length, weight, temperature, and so on. X represents the mean value found in a sample of the output. a
mean control chart is often referred to as an X- bar chart.
 Advantages:This chart shows graphically how a process varies with time. This has a good motivational
effect even if such a graph is not very useful as a control chart.This type of chart enables the state of a

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process evaluated rapidly and quick action to be taken.
 Disadvantages:The chart’s power of test is poor. This is because the ability of the X bar chart to detect
abnormalities generally deteriorates as the size of the subgroups (n) decreases.
ii. The most important feature of the control chart, rational sub grouping is unclear, and within
subgroup variation is obscured.
B. R chart (Range chart): In addition to the central tendency in a sample, it is also required to monitor the
amount of variation from sample to sample. A range charts hows the variation in the sample ranges. It is
used to monitor the range of the measurements in the sample. If the points representing the ranges fall
between the upper and the lower limits it is concluded that the operation is in control.
i. Control charts for attributes: Charts for attributes which are based on the distinction between defectives
and defects. Control charts for attributes are based on countable rather than measurable characteristics.
These are countable ones. The quality of attributes can be determined on the basis of ‘yes or no’. Control
charts in this category include P chart, C chart.
ii. P – Chart (fraction defectives): The P- Charts are used to measure the proportion that is defective in a
sample and it is also used where there is data about the no. of defectives per sample. It is also called
fraction defective chat or percentage defective chart. Here, each item is classified on ‘go or no go’ basis,
that is good or bad (defective). If the sample size is large it could be better.
Use of P-Charts:
 When observations can be placed in to two categories.
 Good or bad.
 Pass or fail.
 Operate or don’t operate.
 When the data consists of multiple samples of several observations each.
iii. C - charts (No. of defectives per piece): The C- chart for no. of non conformities. c – Charts
are used to monitor the number of defectives per unit. Here the sample size should be constant. The c- bar
chart plots the number of defectives or failures per unit. It is useful when several independent defects may
occur in every unit produced, as in complex assemblies.
Ex: Number of printing errors in a book page, number of defective welds per mile of pipe line.
Use of C–charts:
 Used only when the number of occurrences per unit of measure can be counted; non-
occurrences cannot be counted.
 Calls, complaints, failure per unit of time.
 Cracks or faults per unit of distance.
Application of control charts:
 Final assemblies (Attribute Charts).
 Manufactured components such as balls, pin holes, slots etc (variable charts).
 Bullets and shells (Attribute Charts).
 Incoming materials (Attribute and Variable charts depending upon the type of material.
Advantages of Control Charts:
 Control charts indicate whether the process is in control or out of control.
 It defects unusual variations taking place in the process.
 The inspection work also reduces. It ensures the product quality level.
 Brings substantial improvement in product quality.
 Control charts can be applied to many businesses including manufacturing.

Operating Characteristic Curve

The Operating Characteristic Curve (OC Curve) shows you the probability that you will accept lots with
various levels of quality. It is the working plan of acceptance sampling.
 AQL – Acceptance Quality Level

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The AQL (Acceptance Quality Level), the maximum % defective that can be considered satisfactory as
a process average for sampling inspection
 RQL – Rejectable Quality Level

The RQL (Rejectable Quality Level) is the % defective. t is also known as the Lot Tolerance
Percent Defective (LTPD).
 LTPD – Lot Tolerance Percent Defective

The LTPD of a sampling plan is a level of quality routinely rejected by the sampling plan. It is generally
defined as that level of quality (percent defective, defects per hundred units, etc.) which the sampling plan
will accept 10% of the time.
Risks in Acceptance sampling

1. Producer’s risk-: Sometimes inspite of good quality, the sample taken may show defective units
as such the lot will be rejected, such type of risk is known as producer’s risk.
2. Consumer’s Risk-: Sometimes the quality of the lot is not good but the sample results show good
quality units as such the consumer has to accept a defective lot, such a risk is known as
consumer’s risk.

ACCEPTANCE SAMPLING PLANS

A sampling plan is a plan for acceptance sampling that precisely specifies the parameters of the sampling
process and the acceptance/rejection criteria. The variables to be specified include the size of the lot (N), the
size of the sample inspected from the lot (n), the number of defects above which a lot is rejected (c), and the
number of samples that will be taken.
There are different types of sampling plans.

 Single Sampling (Inference made on the basis of only one sample)

 Double Sampling (Inference made on the basis of one or two samples)

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 Sequential Sampling (Additional samples are drawn until an inference can be made) etc.
 Single Sampling Plan
In single sampling plan, the decision regarding the acceptance or rejection is made after drawing a
sample from a bigger lot. Inspection is done and if the defectives exceed a certain number the lot is
rejected. Otherwise, the lot is accepted when the number of defectives is less than the acceptance
number.
 Double Sampling Plan
In this, a small sample is first drawn. If the number of defectives is less than or equal to the
acceptance number (C1) the lot is accepted. If the number of defectives is more than another
acceptance number (C2) which is higher, then C1 then the lot is rejected. If in case, the number in the
inspection lies between C2 and C1, then a second sample is drawn. The entire lot is accepted or
rejected on the basis of outcome of second inspection.

 Sequential Sampling Plan

Sequential sampling plan is used when three or more samples of stated size are permitted and when
the decision on acceptance or rejection must be reached after a stated number of samples.
A first sample of n1 is drawn, the lot is accepted if there are no more than c1 defectives, the lot is
rejected if there are more than r1 defectives. Otherwise a second sample of n2 is drawn. The lot is
accepted if there are no more than c2 defectives in the combined sample of n1 + n2. The lot is
rejected if there are more than r2 defectives in the combined sample of n1 + n2. The procedure is
continued in accordance with the table below.

If by the end of fourth sample, the lot is neither accepted nor rejected, a sample n5 is drawn. The lot is
accepted if the number of defectives in the combined sample of n1 + n2 + n3 + n4 + n5 does not exceed c5.
Otherwise the lot is rejected.
A sequential sampling plan involves higher administrative costs and use of experienced inspectors.
Total Quality Management (TQM)
Total Quality Management (TQM) is a management framework based on the belief that an organization can
build long-term success by having all its members -- from low-level workers to its highest-ranking executives
-- focus on improving quality and, thus, delivering customer satisfaction.

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TQM Tools and Techniques

A variety of TQM tools and techniques can be used to implement TQM effectively. Some of the most
commonly used tools of Quality Management Systems include:

Planning and Strategy Tools:

 Quality Function Deployment (QFD): A structured approach to translating customer needs into product or
service requirements.
 Benchmarking: Comparing an organization’s performance to industry leaders to identify areas for
improvement.
 SWOT Analysis: A tool to assess an organization’s Strengths, Weaknesses, Opportunities, and Threats.

Quality Assurance Tools:

 Statistical Process Control (SPC): Using statistical methods to monitor and control processes.
 Control Charts: Graphical tools to track process variations over time.
 Cause-and-Effect Diagrams (Fishbone Diagrams): Used to identify potential causes of a problem.
 Pareto Charts: A bar chart that ranks causes of a problem by frequency.

Problem-Solving Tools:

 Six Sigma: A data-driven methodology to improve process quality and reduce defects.
 Root Cause Analysis (RCA): A systematic approach to identifying the underlying causes of a problem.
 5 Whys: A questioning technique to drill down to the root cause of a problem.
 Failure Mode and Effects Analysis (FMEA): A proactive technique to identify potential failures and their
consequences.

Customer Focus Tools:

 Customer Satisfaction Surveys: Gathering feedback from customers to understand their needs and
expectations.
 Complaint Management Systems: Efficiently handling customer complaints and using them to improve
processes.
 Customer Focus Groups: Bringing together customers to discuss their experiences and provide insights.

Human Resources Tools:

 Employee Empowerment: Giving employees the authority and responsibility to make decisions.
 Employee Training and Development: Providing employees with the skills and knowledge they need to
succeed.
 Employee Recognition and Rewards: Recognizing and rewarding employees for their contributions.

Additional Tools:

 Kaizen: A philosophy of continuous improvement involving small, incremental changes.

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 Value Stream Mapping: A technique for visualizing the flow of materials and information in a process.
 Checklists: A tool for ensuring consistency and completeness in tasks.

TQM
requires organizations to focus on continuous improvement, or Kaizen.

All departments that contribute to the creation of a product or service -- including design, engineering and
marketing teams -- participate in TQM. Management acts as a facilitator by providing quality staffing and
training and setting goals.

TQM has no single agreed-upon approach but does follow eight guiding principles that focus on improving
quality.

Importance of TQM
TQM can have a beneficial effect on employee and organizational development. By having all employees focus
on quality management and continuous improvement, companies can establish and uphold cultural values that
create long-term success for both customers and the organization. TQM's focus on quality helps organizations
identify skill deficiencies in employees, along with the necessary training, education or mentoring required to
address those needs.

Principles of TQM
TQM prescribes a series of ways for organizations to accomplish this, with the pathway to successful
continuous improvement centered on the use of strategy, data and effective communication to instill a
discipline of quality into the organization's culture and processes.

More specifically, TQM highlights the processes that organizations use to produce their products, and it calls
for organizations to define those processes, continuously monitor and measure their performance, and use that

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performance data to drive improvements. In addition, it requires all employees and organizational departments
to be part of this process. The eight guiding principles that TQM uses to improve quality include the following:

1. Customer focus. The customer determines the quality level of the products and services. Customer input is
valued, as it provides a better understanding of what the customer needs.
2. Employee involvement. All employees must participate in the processes and system. They must be
properly trained and given the needed resources to complete their tasks on time.
3. Focus on process. Processes must be continually analyzed to identify weaknesses. Every employee who
takes part in the process should be properly educated in their contributions, ensuring the right steps are
taken at the right time.
4. Integrated business systems. All TQM processes should be integrated into a business process. Integrated
systems convey potentially useful data across departments, enabling everyone to be on the same page.
5. Strategic and systematic approach. Planning and management are required using a strategic plan with
quality as a base component.
6. Continual improvement. A focus on continually improving quality helps an organization adapt to
changing markets and achieve competitive advantages.
7. Focus on data. Data should be collected, documented and analyzed to improve decision-making accuracy
and to predict trends based on previous history.
8. Communication. Communication between teams with information such as strategies, methodologies or
timeliness is essential to improving operations. Good communication can also motivate employees and
improve morale.
Implementation principles and processes
The general process of implementing TQM follows these steps:

1. The organization assesses its current culture and quality management systems and identifies core values.
2. Management decides to commit to TQM and develops a TQM master plan.
3. The organization identifies and prioritizes customer demands.
4. Management maps the processes needed to meet customer needs.
5. Management creates a team to oversee efforts to improve processes.
6. Management starts contributing to the process by providing additional planning and training.
7. Management creates a process to standardize daily process management.
8. Management continually asks employees for feedback.

Implementing TQM is a long-term commitment, and the length of time needed for planning, development and
implementation varies by organization.

Deming’s 14 Points on Quality Management, or the Deming Model of Quality Management, a core concept on
implementing total quality management (TQM), is a set of management practices to help companies increase their quality and
productivity.

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Deming's 14 Points for Total Quality Management

W. EDWARDS DEMING’S 14 POINTS

1. Create constancy of purpose for improving products and services.

2. Adopt the new philosophy.
3. Cease dependence on inspection to achieve quality.
4. End the practice of awarding business on price alone; instead, minimize total cost by working with a single
supplier.
5. Improve constantly and forever every process for planning, production and service.
6. Institute training on the job.
7. Adopt and institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations and targets for the workforce.
11. Eliminate numerical quotas for the workforce and numerical goals for management.
12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit
system.
13. Institute a vigorous program of education and self-improvement for everyone.
14. Put everybody in the company to work accomplishing the transformation.

These total quality management principles can be put into place by any organization to more effectively
implement total quality management. As a total quality management philosophy, Dr. Deming’s work is
foundational to TQM and its successor, quality management systems.

Benefits of TQM
TQM offers the following benefits:

 Less product defects. An objective of TQM is to create products and services correctly the first time. This
means that products ship with fewer defects, reducing product recalls, future customer support overhead
and product fixes.
 Satisfied customers. High-quality products that meet customers' needs result in higher customer
satisfaction. High customer satisfaction, in turn, can lead to increased market share, revenue growth via
upselling and word-of-mouth marketing initiated by customers.
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 Lower costs. As a result of less product defects, companies save money on customer support, product
replacements, field service and creating product fixes. The cost savings flow to the bottom line, creating
higher profit margins.
 Well-defined cultural values. Organizations that practice TQM develop and nurture core values around
quality management and continuous improvement. The TQM mindset pervades across all aspects of an
organization, from hiring to internal processes to product development.
Disadvantages of TQM
The downsides of TQM include the following:

 Planning and resources. TQM needs a significant amount of planning and resources over time to be
properly allocated to the change.
 Companywide commitment. Continuous improvement in TQM means the organizational culture must
focus on improving processes. All management levels must be supportive.
 Added costs. TQM might add training, infrastructure and team development costs.
 Time. It might take years for an organization to fully show intended results.
 Partial efforts. Because of the effort involved in implementing TQM, a partial move toward it can result in
failure.
Quality circle
A quality circle is a volunteer group composed of workers (or even students), usually under the leadership
of their supervisor (or an elected team leader), who are trained to identify, analyze and solve work-related
problems and present their solutions to management in order to improve the performance of the
organization, and motivate and enrich the work of employees. When matured, true quality circles become
self-managing, having gained the confidence of management.

ISO 9000 Standards

Increases in international trade during the 1980s created a need for the development of universal standards
of quality. Universal standards were seen as necessary in order for companies to be able to objectively
document their quality practices around the world. Then in 1987 the International Organization for
Standardization (ISO) published its first set of standards for quality management called ISO 9000. The
International
Organization for Standardization (ISO) is an international organization whose purpose is to establish
agreement on international quality standards. It currently has members from 91 countries, including the
United States. To develop and promote international quality standards, ISO 9000 has been created. ISO 9000
consists of a set of standards and a certification process for companies. By receiving ISO 9000 certification,
companies demonstrate that they have met the standards specified by the ISO.
The standards are applicable to all types of companies and have gained global acceptance. In many
industries ISO certification has become a requirement for doing business. Also, ISO 9000 standards have
been adopted by the European Community as a standard for companies doing business in Europe.
In December 2000 the first major changes to ISO 9000 were made, introducing the following three new
standards:

• ISO 9000:2000–Quality Management Systems–Fundamentals and Standards: Provides the terminology

and definitions used in the standards. It is the starting point for understanding the system of standards.
• ISO 9001:2000–Quality Management Systems–Requirements: This is the standard used for the
certification of a firm’s quality management system. It is used to demonstrate the conformity of quality
management systems to meet customer requirements.
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• ISO 9004:2000–Quality Management Systems–Guidelines for Performance: Provides guidelines for
establishing a quality management system. It focuses not only on meeting customer requirements but also on
improving performance.

These three standards are the most widely used and apply to the majority of companies.
However, ten more published standards and guidelines exist as part of the ISO 9000 family of standards.
To receive ISO certification, a company must provide extensive documentation of its quality processes. This
includes methods used to monitor quality, methods and frequency of worker training, job descriptions,
inspection programs, and statistical process-control tools used. High-quality documentation of all processes
is critical.
The company is then audited by an ISO 9000 registrar who visits the facility to make sure the company has a
well-documented quality management system and that the process meets the standards. If the registrar finds
that all is in order, certification is received.
Once a company is certified, it is registered in an ISO directory that lists certified companies. The entire
process can take 18 to 24 months and can cost anywhere from $10,000 to $30,000. Companies have to be
recertified by ISO every three years.

One of the shortcomings of ISO certification is that it focuses only on the process used and conformance to
specifications. In contrast to the Baldrige criteria, ISO certification does not address questions about the
product itself and whether it meets customer and market requirements. Today there are over 40,000
companies that are ISO certified. In fact, certification has become a requirement for conducting business in
many industries.

ISO 14000 Standards

The need for standardization of quality created an impetus for the development of other standards. In 1996
the International Standards Organization introduced standards for evaluating a company’s environmental
responsibility. These standards, termed ISO 14000, focus on three major areas:

• Management systems standards measure systems development and integration of environmental

responsibility into the overall business.
• Operations standards include the measurement of consumption of natural resources and energy.
• Environmental systems standards measure emissions, effluents, and other waste systems.
With greater interest in green manufacturing and more awareness of environmental concerns, ISO 14000
may become an important set of standards for promoting environmental responsibility.

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