1995. Jack R. Meredith and Samuel J. Mantel, Jr. E.

QÄ-ManagemeN, 3rd Edition •

CASE
D. U. SUNGERIIOSPITAL PRODUCTS CORP.
Herbert F. Spire—

D. U. Singer Hospital Products Corp. has done suffi• Mike was concerned about the of the pto-
cient new product development at the research and iect. He knew from his own experience that a final
development leve to estimate a high likelihood of mula had yet to be developed. although s develocy
technical success for a product of assured commercial The remaining
success: A long-term antiseptic. Management has in- questions had to do with color. odor, and consistency
structedSingers Antiseptic Division to make a market additives rather than any performance-related
entryat the earliest possible time; they have re- cation. Fortunately. the major rqgulatory issues had
quested a complete plan up to the startup of produce been resolved and he believed that submission of rege
tion. Marketing and other plans fotlowing startup of ulatory documentation would be followed by rapid ap•
production are to be prepared separately after this proval as they already had a letter of approval contin-
gent on final documentation.
plan has been completed.
But there were also issues in packa in that had
Project responsibility is assigned to the division's
to be resolved: development the packaging de-
Research and Development Group; Mike Richards. sign was one of his primaryconcernsat this time.
A&the project scientist who developed the product. is Ultimately, there will have to be manufacturing proce-
assigned responsibility for project management. dures in accordancewith corporatepolicies and stan•
Assistance will be required from other parts of the dards: capital equipment select!on and procurement.
company: Packaging Task Force, R & D Group: Corpo- installation of this equipment and startup.
rate Engir5eering; Corporate Purchasing; Hospital Mike was concerned about defining the prdiect
Products Manufacturing Group: Packaged Products unambiguöusly. To that end. he obtained an interview
Manufacturing Group, with S. L. Mander. the group vice-president.
 When he asked
shoul Mander where his res nsibili ting approval in three weeks. but Environmental
the executive turne
him. Mike had the question back to swears it can be done."
been preparedfor this
would like to and said
regard his part of the project that he "Oh. it can be done in this case because of the
When the as done preparatorywork.Of course. I won't say that this esti-
production process could be
manufacturing. They turned over to mate of three weeks is as certain as our other time es-
agreed that according to Singer timates.All we need is a change of staff at the Agency
practice, this would
be
ation could produce when the manufacturing oper- and we are in trouble. But once you have both the
a 95 percent yield of product and the ?ppæal. you can immediately
(fully packaged) at a
level of 80 percent of the full pro- start on developing the processing system (g)."
duction goal of 10million
liters per year. "Yes, and how I wish we could get a lead on that,
"But t want you to remember."
you must meet all current FDA.
said Mander, "that but the designers say that there is too much uncer-
EPA, and OSHA regu- tainty and they von•t move until they have both speci-
lations and you must be in compliance with fications and regulatory documentation and approval.
our inter-
nal specification—the one I've got is
dated September They are offering pretty fast response: six weeks from
and is RD7&965.And you knowthat manufacturing start to finish for the processing system."
now—quite rightly. I feel—insists on full written man- "They are a good crew. Mike. And of course, you
ufacturin rocedu know that you don't have to delay on starting the
After this discussion, Mike felt that he had packaging segment of this project. You can start de-
enough information about this aspect to start to pin veloping the packaging concept (e) just as soon as the
down what had to be done to' achieve these results. product rationale hqs been developed. If my experi-
His first step .in this UffortiWaSto meet with P. H , ence is any judge, it wili take a full eight weeks;you'll .
Docent, the director of res&rch. have to work to keep the process from running for.
'You are naive if you think that you can just start
right in finalizing the formula,"said Docent. "You must "But as soon as that is finished we can start on
first develop a product rationale (a).e This is a the design of the package and its materials (f) which
formally defined rocess according to company policy. usually takes about six weeks. Once that is done we
at ettng expects inputs at this stage. manufacturing can start on the packaging system (h) which shouldn't
expects their voice to be heard. and you will have to take longer than eight weeks.• concluded Mike. At this
have approvals from every unit oi the company that is point he realized that aithough Docent would have
involved; all of this is reviewedby the Executive general knowledge. he needed to talk directly to the
Committee, You should have no trouble if you do your Director of Manufacturing.
homework, but expect to spend a good eight weeks to The first step. which follows the completion of
get this done: the development of processing and packaging sys-
-That certainly stretches things out: said Mike. tems,- said the Director of Manufa<uring. "is to do a
expected to take 12 weeks to develop the ingredient complete study of the facilities requirements(i). You
-(formula (b) and you know that I cant start to establish won't be able to get that done in less than four weeks.
product specifietions (c) until the formula is com- And that must precede the preparation
plete. That's another ital equipment list (i) which should take about three-
"Yes. but while you are working on the product quarters as long. Of course. as soon as both the
specificationsyou can get going on the regulatory process system and packaging system are completed.
documentation (d). Full internal specifications are not you could start on preparing the written manufactut.
required for that work. but you can't start those docu- ing procedures (q)."
ments until the formula is complete." "But." said Mike, "Can I really finish the proce-
"Yes. and I find it hard to believe that we can dures before I have installed and constructed the facil-
push through both preparationof documents and get- ities(p)?
"No, quite right. What you can do is get the first
phase done, but the last three of the ten weeks it will
take to do that witl have to wait for the installation
•Tasks which must be and construdion.-
accounted for in a network plan
ate identified by lower-case alphabetic symbols in parenthe- Then this means that I really have two phases for
ses. Refer to Exhibit I. the writing. that which can be completed without the
432 V
CHAVI
ER 9 / RESOURCEALLOCATION

E
 QUESTIONS
433
installation and construction (q). and that which has activities and asking each group involved what was
to wait for those inputs (q 0." their level of employee input. The results of this sur-
"True. Now you realize that the last thing you vey are shown in Exhibit l.
have to do is to run the equipment in a pilot test (r) For the purposes of overall planning. the ac-
which will show that you have reached a satisfactory counting department told Mike that he could estimate
level?• a cost of $600 per week per employee. This would en-
"Yes. Since that must include debugging, I've esti- able him to provide a cash flow forecast along with his
mated a six-week period as adequate." The director of plan, which the chief accountantsaid would be ex-
manufacturing assented. Mike continued, "What I'm pected. something that Mike had not realized.
not sure of is whetherwe can run all the installation Mike knew that it was customary at D. U. Singer
tasks in parallel.- to provide the following as parts of a plan to be sub-
"You can let the purchase orders and carry out mitted to the executive committee:
the procurement of process equipment (k), packaging
equipment (l), and faölities (m) as soon as the capital I.Statement of Objectives.
equipment list is complete. The installation of each of 2. Work Breakdown Structure.
these types of equipment and facilities can start as 3. A network. either activity-on-node (CPM) or event.
soon as the goods are on hand on.node (PERT).
-What do you estimate for the times to do these
tasks?" asked Mike. The dire<ot of manufacturin€ esti- 4. A determination of the critical path or paths and
mated 18. 8, and 4 weeks for the purchasingphases the duration along the critical path.
for each of the subsystems in thåt order and four 5. An Early-Stat.Schedule, in which everyaaivity
weeks for each of the installations. Then I can regard would be Started at its Early Start. regardléss of
my job as done with the delivery of theoprocedures. resource constraints.
and when I show my 95 percent yield: said Mike. and 6. A period labor requirements graph for.
the director of manufacturingagreed. but reminded a. Each group.
Mike that none of the purchasing cycles could start b. Proiect as a whole.
until the capital equipment list •had been prepared
7. Cumulative labor requirements plot for:
and approved (i) which he saw as a three-weektask.
a. Each group.
The executive committee of D. U. Singer Hospital
b. Project as a whole.
Products Corporation set a starting date for the pro-
ject of December 10 and asked Mike to proiect a come 8. A schedule based on the best leveling of labor re-
pletion date with his submission of the plan. the quirements that could •be achieved without
committee's request implied that whatever date Mike lengthening project duration by more than 15 per-
came up with was acceptable. but Mike knew that he cent in calendar days.
would be expected to show how to shorten the time to 9. A cash flow requirementsgraph for the proiea
complete the project. However. his task in making the when leveled, assuming that commitments for
schedule was clear; he had to establish the resource materials and other direct charges are made at
requirements and deal with calendar constraints as the start of the activitybut that arrivals of pur-
best as he could. chased goods are uniformly distributed through
To this end, Mike had to get an estimateof tee the first two-thirds of the activity.
sources which he decided to do by making a list of the

QUESTIONS

Construct the nine elements of the plan identified 4. Should the executive committee approve the
above. plan? Why or why not?
2. Analyze the plan for potential problems. 5. What altematives might the executive committee
3. Analyze the plan for opportunities. suggest for analysis?