Case Problem: Warehouse Expansion

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Case Problem: Warehouse Expansion

Adapted from Anderson, Sweeney, and Williams, pp. 435-436

R. C. Coleman distributes a variety of food products that are sold through grocery store and supermarket outlets. The company receives orders directly from the individual outlets, with a typical order requesting the delivery of several cases of anywhere from 20 to 50 different products. Under the company’s current warehouse operation, warehouse clerks dispatch order-picking personnel to fill each order and the goods moved to the warehouse shipping area. Due to the high labor cost and the relatively low productivity of hand order-picking, the company has decided to automate the warehouse operation by installing a computer-controlled order-picking system, along with a conveyor system for moving goods from storage to the warehouse shipping area.

As R. C. Coleman’s director of material management, you have been named the project manager in charge of the automated warehouse system. After consulting with members of the engineering staff and warehouse management personnel, you have compiled a list of activities associated with the project, along with various time and cost estimates. This information is as follows:

Activity Description Immediate Predecessor

A Determine equipment needs --

B Obtain vendor Proposals --

C Select vendor A, B

D Design system operator positions A

E Order system C

F Design new warehouse layout C

G Design warehouse F

H Advertise system operator positions D

I Design computer interface C

J Interface computer E, G, I

K Install system E, G

L Interview and hire system operators H

M Train system operators J, L

N Test system K, M

PERT Data CPM Data

Time (weeks) Time (weeks) Cost ($)

Activity Optimistic Most Likely Pessimistic Normal Crash Normal Crash

A 5 10 12 10 5 1,000 2,400

B 7 8 13 8 7 1,000 2,420

C 4 8 15 8 4 1,500 2,900

D 4 7 8 7 4 1,600 4,000

E 3 8 14 8 3 2,000 16,000

F 4 7 9 7 4 5,000 7,550

G 1 5 7 5 1 3,000 6,800

H 5 7 8 7 5 2,000 15,800

I 6 14 16 14 6 8,000 11,400

J 5 8 20 8 5 5,000 9,050

K 9 13 24 13 9 10,000 16,960

L 7 14 22 14 7 4,000 10,650

M 7 10 26 10 7 4,000 14,050

N 4 6 12 6 4 4,000 5,800

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