Question roject Management Shale Oil Company

roject ManagementShale Oil CompanyShale Oil Company’s Aston, Ohio, manufacturing complex comprises several operating units. These units process the crude oil that is pumped through and transform it into a multitude of hydrocarbon products. The units run 24 hours a day, 7 days a week, and must be shut down for maintenance on a predetermined schedule. One such unit is Distillation Unit No. 5, or DU5. Studies have shown that DU5 can operate only 3 years without major equipment breakdowns, and excessive loss of efficiency. Therefore, DU5 is shut down every 3 years for cleaning, inspection, and repairs.

DU5 is the only distillation unit for crude oil in the Aston complex, and its shutdown severely affects all other operating units. Some of the production can be compensated for by Shale refineries in other locations, but the rest must be processed and stored before the shutdown. Without proper planning, a nationwide shortage of Shale gasoline could occur. The time of DU5’s shutdown is critical, and the length of time the unit is down must be kept to a minimum to limit production loss. Shale uses PERT as a planning and controlling tool to minimize shutdown time.

The first phase of a shutdown is to open and clean the equipment. Inspectors can then enter the unit and examine the damage. Once damages are determined, the needed repairs can be carried out. Repair times can vary considerably, depending on what damage the inspection reveals. Based on previous inspection records, some repair work is known ahead of time. Thorough cleaning of the equipment is also known to improve the unit’s operating efficiency. The table below lists the many maintenance activities and their estimated completion times.

DISCUSSION QUESTIONS

1. Determine the expected shutdown time and the probability that the shutdown can be completed 1 week earlier.

2. What are the probabilities that Shale finishes the maintenance project 1, 2, 3, 4, 5, or 6 days earlier?

3.Shale Oil is considering increasing the budget to shorten the shutdown. How do you suggest the company proceed?

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