the benefits and limitations of CPA as a management tool

9.3 Operations Strategy – Operations Planning and CPA

1. Operations Planning

Operations planning translates a company’s strategic objectives into a detailed, time‑bound schedule of activities that will produce the required goods or services. It ensures that the right resources (people, plant, equipment and materials) are available at the right time and in the right quantities.

1.1 Purpose of Operations Planning

• Match output to forecast demand – align production volumes with marketing sales forecasts and market‑share targets.
• Coordinate activities across marketing, finance, HR and the supply‑chain.
• Minimise waste, idle time and unnecessary inventory.
• Provide a basis for monitoring performance and controlling costs.

1.2 Typical Outputs

• Production (or operations) schedule – when each product or batch will be made.
• Capacity‑allocation plan – which plant, machines and staff are assigned to each activity.
• Inventory targets – safety‑stock levels, work‑in‑process limits.
• Performance targets – lead‑time, utilisation rates, quality standards, KPI tables.

2. Network Diagrams

A network diagram shows the logical sequence of activities required to complete a project. It is the foundation of Critical Path Analysis (CPA).

• Activities (tasks) – work elements that must be performed; shown as boxes (activity‑on‑node) or arrows (activity‑on‑arrow).
• Dummy activities – zero‑duration arrows used only to represent precedence relationships.
• Nodes – points where arrows start or finish; they mark the start or finish of an activity.
• Arrows – indicate the direction of flow and the precedence (which activity must finish before another can start).

Simple example (design → prototype → test → manufacture → launch):

[Start] → (A) Design (5 d) → (B) Prototype (3 d) → (C) Test (2 d) → (D) Manufacture (7 d) → (E) Launch (1 d) → [Finish]

3. Critical Path Analysis (CPA)

3.1 What is CPA?

CPA is a project‑scheduling technique that identifies the longest sequence of activities – the critical path – which determines the minimum time required to complete the whole project. Activities on the critical path have zero total float; any delay to them delays the project.

3.2 Steps in CPA

1. List every activity, its estimated duration and its immediate predecessor(s).
2. Draw the network diagram (activity‑on‑node is the standard for A‑Level).
3. Perform a forward pass to obtain the Earliest Start (ES) and Earliest Finish (EF) for each activity.
4. Perform a backward pass to obtain the Latest Start (LS) and Latest Finish (LF) for each activity.
5. Calculate Total Float (TF) and Free Float (FF):
   • TF = LS – ES (or LF – EF)
   • FF = ES of the next activity – EF of the current activity
6. Identify the critical path – activities with TF = 0.
7. Use the results for resource allocation, cost control and contingency planning.

3.3 Calculating Early / Late Times and Float

3.4 Interpreting the Critical Path

• Shows the shortest possible project duration (the makespan).
• Activities on the critical path require close monitoring and priority for resources.
• Reducing the duration of any critical‑path activity shortens the overall project time.
• Non‑critical activities with float can be delayed or re‑sequenced without affecting the finish date, giving managers flexibility.

4. Benefits and Limitations of CPA

5. Using CPA in Decision‑Making

Once the critical path and float values are known, managers can:

• Allocate capacity – assign the most skilled workers or the most reliable equipment to critical activities to minimise the risk of delay.
• Control costs – evaluate whether the cost of speeding up a critical activity (e.g., overtime, additional machines) is justified by the reduction in project duration.
• Plan contingencies – use float on non‑critical activities to schedule maintenance, training or other secondary work without affecting the finish date.
• Prioritise investments – if a particular resource repeatedly constrains the critical path, a strategic decision can be made to increase capacity in that area.

6. Example: Smartphone Assembly Project

Scenario: A company plans to launch a new smartphone. The key activities, durations (in days) and immediate predecessors are listed below.

6.1 Forward Pass (ES / EF)

A: ES = 0   EF = 5
B: ES = 5   EF = 13
C: ES = 5   EF = 9
D: ES = 9   EF = 15
E: ES = 13  EF = 20
F: ES = 20  EF = 32   (max of D‑EF=15 and E‑EF=20 → ES=20)
G: ES = 32  EF = 35

6.2 Backward Pass (LS / LF)

G: LF = 35  LS = 32
F: LF = 32  LS = 20
E: LF = 20  LS = 13
D: LF = 20  LS = 14
C: LF = 14  LS = 10
B: LF = 13  LS = 5
A: LF = 5   LS = 0

6.3 Float

• TF = LS – ES (or LF – EF). All activities A‑F have TF = 0 → they are on the critical path.
• Activity C’s free float = ES(D) – EF(C) = 9 – 9 = 0 (no slack).

6.4 Interpretation & Management Action

• Critical path: A → B → E → F → G (total duration 35 days).
• Any delay in design, component sourcing, line set‑up or mass production will push the launch date.
• Possible actions:
  • Add a second shift or extra machines to activity F to reduce its 12‑day duration.
  • Negotiate faster delivery terms or hold safety stock for components (activity B) to create a buffer.

7. Glossary of Key Terms

• Critical Path – the longest sequence of activities that determines the shortest possible project duration; activities on this path have zero total float.
• Float (Slack) – the amount of time an activity can be delayed without affecting the project finish date.
  • Total Float (TF) – overall delay allowance.
  • Free Float (FF) – delay allowance before affecting any immediate successor.
• Network Diagram – a graphical representation of activities and their precedence relationships.
• Activity Duration – the estimated time required to complete an activity.
• Precedence Relationship – the logical order that dictates which activities must be completed before others can start.
• Earliest Start (ES) / Earliest Finish (EF) – the soonest times an activity can start/finish based on predecessor completion.
• Latest Start (LS) / Latest Finish (LF) – the latest times an activity can start/finish without delaying the project.
• Dummy Activity – a zero‑duration activity used only to show a logical relationship in the network.

8. Summary

Operations planning bridges a firm’s strategic goals with the day‑to‑day production schedule. Critical Path Analysis provides a systematic way to map, time‑stamp and control that schedule. By identifying the critical path and quantifying float, managers can allocate capacity, control costs, plan contingencies and make informed investment decisions. The technique is powerful, but its reliability depends on realistic activity‑duration estimates and the willingness to invest time in constructing and maintaining the network diagram.