COM 3372

Management Science
2025

The Network Model

Hiran Abeywickrama
Department of Commerce
Faculty of Management Studies and Commerce
University of Sri Jayewardenepura

Read Chapter 6 in the recommended textbook

Network
• Many operations research situations can be modeled and
solved as networks.
• A network consists of a set of nodes (N) linked by arcs (A).
• N = 1, 2, 3, 4, 56
• A = (1, 2), (1, 3), (2, 3), (2, 5) ...
• A path is a set of arcs joining two distinct nodes, passing
through other nodes in the network.
• A network is said to be connected if every two distinct nodes
are linked by at least one path.
Network Optimization
• Network optimization is scheduling the activities at
cost efficiently.

• There are four network optimization algorithms.

1. Minimal spanning tree
2. Shortest-route algorithm
3. Maximal-flow algorithm
4. Critical Path Method (CPM) algorithm
Network Model
Network model is to determine the minimum-cost flow
schedule for a project.
Devise analytic tools for scheduling the activities of a project at
cost efficiently.
A project is defined as a collection of interrelated activities with
each activity consuming time and resources.

Network Model Techniques:

Critical Path Method (CPM): Assumes deterministic activity
durations
Program Evaluation and Review Technique (PERT): Assumes
probabilistic durations.
Both CPM and PERT are network-based methods designed to
assist in the planning, scheduling, and control of projects.
Network Model cont.
The steps involve:
• Define the activities of the project, their precedence
relationships, and
• their time requirements.
• The precedence relationships among the activities are
modeled as a network. Specific computations for developing
the time schedule.
Network Representation

• Each activity is represented by an arc pointing in the direction

of progress in the project.
• The nodes of the network establish the precedence
relationships among the different activities.
• Two rules are available for constructing the network.

Rule 1. Each activity is represented by one, and only one, arc.

Rule 2. Each activity must be identified by two distinct end

nodes.

Let’s look at the example. (page 275)

Example 01

Example 01: Activity of Node (AON)

Example 01 (Cont.)

Example 01: Activity of ARC (AOA)

Page: 275
The activities associated with the production of the textbook are
summarized as:
First: Draw project network (AON)
Second: Draw project network (AOA)
Third: Forward Pass & Backward Pass Calculation
Critical Path Method
1. Total duration needed to complete the project
2. Classification of the activities of the project as critical (fixed finish
and start time) and non-critical (flexible finish and start time)

Remember: A delay in the start time of a critical activity definitely

causes a delay in the completion of the entire project, whereas a
delay in a noncritical activity may not affect the completion date of
the project.
The critical path calculations involve two passes:
The forward pass determines the earliest occurrence times of the
events
The backward pass calculates their latest occurrence times.
An activity that does not equal forward pass and backward pass
times is noncritical.
The critical activities of a network constitute the longest path
spanning the project network from start to finish
Let’s see the example..
 Forward and Backward calculations for the Project

Node 3: B – 6, A + C = 8 (longest path is forward pass; 8)

Node 5: Node 2 + E = (8 + 2 = 10), Node 4 = 13 (longest path is forward pass; 13)
Node 6: Node 3 + F = (8 + 11 = 19), Node 5 + H = (13 + 12 = 25), Node 4 + G = (13 + 1 =14)
(longest path is forward pass; 25)
 Similarly, we can compute Backward Pass;

Shortest path is backward pass

As expected, the critical path 1-2-4-5-6 spans the network from start (node
1) to finish (node 6) within 25 days.
The critical activities (A, D and H) are staggered one right after
the other to ensure that the project is completed within 25-day
duration
Now, consider…

Suppose Manager needs to complete the

project by 26 days. The standard deviation
production of the textbook is ± 1.4 days.
What would be the probability of
completing project by desired date.
Let’s calculate the probability
Z-score = (Due date – Project date) / SD

= 26 – 25 / 1.4
= 0.71
Table value = 0.7611 (Normal distribution table)

There is 76.1% probability of completing the

production of the textbook by due date.
Can we schedule the non-critical activities within
their respective spans?
• PERT provides an excellent procedure for investigating time-
cost trade-offs for individual activity.

Time-Cost Trade-Offs for Individual Activities

• Concern with determining how much (if any) to crash each
of the activities in order to reduce the anticipated duration
of the project to a desired value
• Crashing an activity refers to taking special costly measures
to reduce the duration of an activity below its normal value
• Crashing the project refers to crashing a number of activities
in order to reduce the duration of the project below its
normal value
Let’s see another example..
Example for time-cost trade-offs
Project Network
Project Network
 The paths and path lengths of the Project

Critical path
START A – B – C – E – F – J – L – N FINISH
Estimated project duration = 44 weeks
• Now suppose, Manager wants to investigate the
possibility to reduce the anticipated duration of the
project to 40 weeks.
• The company will be paid $5.4 million for doing this
project
Sum of normal costs = $4.55 million
Sum of crash costs = $6.15 million
• Crash cost per week calculation:
Crash cost – Nominal cost
Maximum reduction in time
Activity J = $490,000 - $430,000
2
= $30,000.
Crash cost per week
• The problem is; What is the least expensive way of
crashing some activities to reduce the (estimated)
project duration to the specified level (40 weeks)?
• One way of solving this problem is marginal cost
analysis
• Determine the least expensive way to reduce project
duration 1 week at a time
• The smallest cost is $30,000 for activity J.
• This change results in reducing the length of each
path that includes activity J (the third, fourth, fifth,
and sixth paths
• At this point, the fourth path still is the longest (42
weeks), but activity J cannot be shortened any
further
• Among the other activities on this path, activity F now is the least
expensive to shorten ($40,000 per week)
• Therefore, this activity is shortened by a week to obtain the fourth
row of Table 6, and then (because a maximum reduction of 2 weeks is
allowed) is shortened by another week to obtain the last row of this
table.
• The longest path (a tie between the first, fourth, and sixth paths) now
has the desired length of 40 weeks, so we don’t need to do any more
crashing
• The total cost of crashing activities J and F to get down to this project
duration of 40 weeks is = $140,000 (J = $60,000; F = $80,000)
Why we crash?
• To speedup the project
How do we crash?
• By using marginal cost analysis (1 week at a time)
Why we prioritize the critical path when crashing?
• Critical path is the longest path + the critical activities are consuming
more time

Steps in crashing
1. Identify the maximum reduction in time (Normal time – crashing
time)
2. Identify the crash cost per week [(Crash cost – Normal
cost)/Maximum reduction in time]
3. Identify the available paths
4. Identify the critical path
5. Draw the crashing diagram
Let’s start crashing (44 Weeks to 40 Weeks)
• Draw the diagram and mention the time duration

Identified Paths
Let’s start crashing (44 Weeks to 40 Weeks)
• Identify the activities to be crashed (02 conditions to be applied)
1. Activity should be included in the critical path
2. Activity should have the minimum value

Activity Crash cost MRiT Activity Crash cost per MRiT

per week ($) week ($)
A 100,000 01 Week F 40,000 02 Weeks
B 50,000 02 Weeks J 30,000 02 Weeks
C 80,000 03 Weeks L 50,000 02 Weeks
E 160,000 01 Week N 60,000 03 Weeks
Activity Crash cost MRiT Activity Crash cost per MRiT
per week ($) week ($)
A 100,000 01 Week F 40,000 02 Weeks
B 50,000 02 Weeks J 30,000 02 Weeks
C 80,000 03 Weeks L 50,000 02 Weeks
E 160,000 01 Week N 60,000 03 Weeks
Activity Crash cost MRiT Activity Crash cost per MRiT
per week ($) week ($)
A 100,000 01 Week F 40,000 02 Weeks
B 50,000 02 Weeks J 30,000 02 Weeks
C 80,000 03 Weeks L 50,000 02 Weeks
E 160,000 01 Week N 60,000 03 Weeks
Activity Crash cost MRiT Activity Crash cost per MRiT
per week ($) week ($)
A 100,000 01 Week F 40,000 02 Weeks
B 50,000 02 Weeks J 30,000 02 Weeks
C 80,000 03 Weeks L 50,000 02 Weeks
E 160,000 01 Week N 60,000 03 Weeks