Reference no: EM13873159
Seaburg Construction Company, formed in 1950by James Seaburg, was initially engaged in residential construction in Mobile, Alabama.Later, Mr. Seaburg's business was expanded to include the construction of officebuildings and apartment complexes. In 1965, an industrial division was added totake advantage of the industrial expansion in the Gulf coast region.
Seaburg's industrial division performs both newplant construction and contract maintenance for existing plants. High qualitywork and strict adherence to deadlines have made Seaburg a favorite among thecompanies that have expanded their industrial capacity in the region.Moreover, Seaburg maintains good relationships with the local trade unions. Hestill carries a union card as a carpenter even though he has not worked at thetrade for the past 20 years. As a result, Seaburg's jobs are rarely interruptedbecause of labor disputes.
Because of this positive image, several firmsretain the Seaburg Construction Company to perform contract maintenance on thefacilities that it built. Also, this reputation has enhanced the company'sability to capture contract maintenance for plants that were constructed byother firms. Seaburg's construction superintendents work closely with theproduction managers of those plants that have signed maintenance contracts withSeaburg. Even though most contracts are cost-plus, Seaburg enjoys saving moneyfor his client companies. In fact, he has instituted work sampling to ensurethat his maintenance crews are productive. In particular, he takes pride in thework of his operations research staff. In this part of his company, Seaburg hasadopted opera ltions research techniques used by the AlliedForces in World War II. (The British Admiralty used operations research teamsto increase the size of convoys. Larger convoys reduced the vulnerability toGerman submarine attack.) While Seaburg's knowledge of operations researchtechniques was not acquired through formal training, he has been successful inacquiring, through individual effort, considerable expertise in the use ofPERT/Cost and other basic tools. Consequently, he now relies heavily on thosetechniques which he understands and which have application in the constructionindustry. Seaburg particularly likes having his operations research staffreduce the complexity of a large-scale maintenance turnaround. Through the useof network models, planning and control of turnaround activities areeffected. Seaburg's superintendents aresensitive to the lost production incurred by their clients during theseturnaround periods. They know that restoration of production is especially importantfor a "sold-out" plant.
THE TURNAROUND PROBLEM
In the spring of 1980, one of Seaburg's clients,a chlorine complex in nearby McIntosh, Alabama,was operating at 1OO percent of capacity-"sold-out." A maintenanceturnaround was scheduled, however, to perform major repairs to the facility.Turnaround activities, expected times for their completion, and sequencingconstraints were as shown in Table 1 (below)
It should be notedfrom the above sequencing constraints that job C (removal of the existingchlorine compressor and installation of a new unit) constrained job N(changing the heat exchanger on the first effect evaporator) because a largecrane was needed for both jobs. Plans called for the crane to perform thecompressor job (C) before moving to the heat exchanger job (N). Seaburg's staff advised the production managerthat a second crane could be rented so that both jobs could be performedsimultaneously. The rental of the cranewould cost a base fee of $10,000 plus $8,000 per day. Contribution to profit and overhead from theproduction complex was estimated at $40,000 per day.
TABLE 1
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Maintenance Turnaround Data
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|
|
Job Initial
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Job
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t, (hours)
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Sequencing Constraint
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alpha
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Project start
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0
|
-
|
A
|
Shut down plant and secure for maintenance
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8
|
alpha
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B
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Shut down caustic evaporation plant and
|
|
|
|
secure for maintenance
|
16
|
alpha
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C
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Remove existing chlorine compressor and
|
|
|
|
install new unit
|
72
|
A
|
D
|
Clean chlo.rine coolers
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16
|
A
|
E
|
Clean and repack acid towers
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24
|
A
|
F
|
Retube liquefiers
|
36
|
A
|
G
|
Change ruptured discs and relief valves
|
10
|
A
|
H
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Change leakage control valves
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16
|
A
|
1
|
Clean salt saturation
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24
|
B
|
J
|
Replace entrainment separators
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24
|
B
|
K
|
Change control valves
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16
|
B
|
L
|
Change impellers on circulating pumps
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8
|
B
|
M
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Dry and leak test chlorine equipment
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24
|
C,D,E,F,G,H
|
N
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Change heat exchanger on the first-effect
|
|
|
|
evaporator
|
48
|
B,C
|
0
|
Leak test and start caustic evaporation plant
|
8
|
I,J ,K,L,M
|
P
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Start up chlorine plant
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8
|
M,O,N
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omega
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Project end
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0
|
P
|
DISCUSSION QUESTIONS
A. Should the second crane be rented? What is the minimal cost or maximum profitresulting from using the second crane? Assume in the analysis that "8" hours is equivalent to "one" daysoperation. Also assume that Seaburgconstruction owns a crane and that theiris no cost associated with it's operation for this case. Therefore, only the cost of the second craneis applicable for your analysis.
B. Seaburgconstruction company is considering subcontracting an outside construction firmto assist in completing theproject. This construction firm willsupply a second crane and work hand in hand with the Seaburg constructionstaff. The overall effect will be thatthe project may be completed sooner than expected as a result of supplyingadditional resources. Seaburg managementteam has outlined the cost and time savings benefit for the tasks that can beaccelerated as a result of hiring the outside firm as follows:
NORMAL CRASH ADDITIONAL
ACTIVITY TIME TIME COST to ACCELERATE
B 16hrs 8 hrs $15,000
C 72hrs 48 hrs $ 50,000
E 24hrs 16 hrs $ 10,000
F 36hrs 24 hrs $ 15,000
K 16hrs 8 hrs $ 15,000
M 24hrs 16 hrs $ 35,000
Should Seaburg hire this firm? If so, what activities should be crashed andby what amounts? Assume Seaburg can hirethe firm for only the appropriate tasks needed.
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