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Activity Delay in Stochastic Project Networks

Author

Listed:
  • Arnold H. Buss

    (Naval Postgraduate School, Monterey, California)

  • Meir J. Rosenblatt

    (Technion-Israel Institute of Technology, Haifa, Israel Washington University, St. Louis, Missouri)

Abstract

In this paper we deal with a stochastic project network and consider the impact of activity delay to maximize the expected present value of a project. It is shown that in certain situations, delaying the onset of an activity from its earliest start time can indeed increase the present value of a project due to the postponing of associated negative cash flows. Furthermore, a project that could otherwise be rejected (negative expected present value) may become profitable (positive expected present value) due to delay. We demonstrate that even activities on the critical path, as determined by each activity's expected duration, may be profitably delayed. Optimal and approximate procedures are developed to determine the amount of delay of the various activities.

Suggested Citation

  • Arnold H. Buss & Meir J. Rosenblatt, 1997. "Activity Delay in Stochastic Project Networks," Operations Research, INFORMS, vol. 45(1), pages 126-139, February.
    • Handle: RePEc:inm:oropre:v:45:y:1997:i:1:p:126-139
    DOI: 10.1287/opre.45.1.126
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    Citations

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    Cited by:

    1. Creemers, Stefan, 2018. "Maximizing the expected net present value of a project with phase-type distributed activity durations: An efficient globally optimal solution procedure," European Journal of Operational Research, Elsevier, vol. 267(1), pages 16-22.
    2. Wiesemann, Wolfram & Kuhn, Daniel & Rustem, Berç, 2010. "Maximizing the net present value of a project under uncertainty," European Journal of Operational Research, Elsevier, vol. 202(2), pages 356-367, April.
    3. Tony Chen & Ted Klastorin & Michael R. Wagner, 2015. "Incentive Contracts in Serial Stochastic Projects," Manufacturing & Service Operations Management, INFORMS, vol. 17(3), pages 290-301, July.
    4. Creemers, Stefan & De Reyck, Bert & Leus, Roel, 2015. "Project planning with alternative technologies in uncertain environments," European Journal of Operational Research, Elsevier, vol. 242(2), pages 465-476.
    5. Jorgensen, Trond & Wallace, Stein W., 2000. "Improving project cost estimation by taking into account managerial flexibility," European Journal of Operational Research, Elsevier, vol. 127(2), pages 239-251, December.
    6. Creemers, Stefan, 2019. "The preemptive stochastic resource-constrained project scheduling problem," European Journal of Operational Research, Elsevier, vol. 277(1), pages 238-247.
    7. Sobel, Matthew J. & Szmerekovsky, Joseph G. & Tilson, Vera, 2009. "Scheduling projects with stochastic activity duration to maximize expected net present value," European Journal of Operational Research, Elsevier, vol. 198(3), pages 697-705, November.
    8. Bruni, Maria Elena & Hazır, Öncü, 2024. "A risk-averse distributionally robust project scheduling model to address payment delays," European Journal of Operational Research, Elsevier, vol. 318(2), pages 398-407.
    9. Stefan Creemers, 2019. "The preemptive stochastic resource-constrained project scheduling problem," Post-Print hal-02992618, HAL.
    10. Peymankar, Mahboobeh & Davari, Morteza & Ranjbar, Mohammad, 2021. "Maximizing the expected net present value in a project with uncertain cash flows," European Journal of Operational Research, Elsevier, vol. 294(2), pages 442-452.
    11. Yangyang Liang & Nanfang Cui & Tian Wang & Erik Demeulemeester, 2019. "Robust resource-constrained max-NPV project scheduling with stochastic activity duration," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 41(1), pages 219-254, March.
    12. Hazır, Öncü & Ulusoy, Gündüz, 2020. "A classification and review of approaches and methods for modeling uncertainty in projects," International Journal of Production Economics, Elsevier, vol. 223(C).
    13. Eli Gutin & Daniel Kuhn & Wolfram Wiesemann, 2015. "Interdiction Games on Markovian PERT Networks," Management Science, INFORMS, vol. 61(5), pages 999-1017, May.
    14. Shi Chen & Ted Klastorin & Michael R. Wagner, 2021. "Designing practical coordinating contracts in decentralized projects," Naval Research Logistics (NRL), John Wiley & Sons, vol. 68(2), pages 183-198, March.
    15. Öncü Hazir & Gündüz Ulusoy, 2020. "A classification and review of approaches and methods for modeling uncertainty in projects," Post-Print hal-02898162, HAL.
    16. Salim Rostami & Stefan Creemers & Roel Leus, 2018. "New strategies for stochastic resource-constrained project scheduling," Journal of Scheduling, Springer, vol. 21(3), pages 349-365, June.
    17. Alessio Angius & András Horváth & Marcello Urgo, 2021. "A Kronecker Algebra Formulation for Markov Activity Networks with Phase-Type Distributions," Mathematics, MDPI, vol. 9(12), pages 1-22, June.
    18. Rostami, Salim & Creemers, Stefan & Leus, Roel, 2024. "Maximizing the net present value of a project under uncertainty: Activity delays and dynamic policies," European Journal of Operational Research, Elsevier, vol. 317(1), pages 16-24.
    19. Elmaghraby, Salah E., 2001. "On the optimal release time of jobs with random processing times, with extensions to other criteria," International Journal of Production Economics, Elsevier, vol. 74(1-3), pages 103-113, December.
    20. Hermans, Ben & Leus, Roel & Looy, Bart Van, 2023. "Deciding on scheduling, secrecy, and patenting during the new product development process: The relevance of project planning models," Omega, Elsevier, vol. 116(C).
    21. Illana Bendavid & Boaz Golany, 2009. "Setting gates for activities in the stochastic project scheduling problem through the cross entropy methodology," Annals of Operations Research, Springer, vol. 172(1), pages 259-276, November.
    22. Elmaghraby, S. E. & Ferreira, A. A. & Tavares, L. V., 2000. "Optimal start times under stochastic activity durations," International Journal of Production Economics, Elsevier, vol. 64(1-3), pages 153-164, March.
    23. Illana Bendavid & Boaz Golany, 2011. "Setting gates for activities in the stochastic project scheduling problem through the cross entropy methodology," Annals of Operations Research, Springer, vol. 189(1), pages 25-42, September.
    24. Song, Dong-Ping, 2006. "Raw material release time control for complex make-to-order products with stochastic processing times," International Journal of Production Economics, Elsevier, vol. 103(1), pages 371-385, September.
    25. Illana Bendavid & Boaz Golany, 2011. "Predetermined intervals for start times of activities in the stochastic project scheduling problem," Annals of Operations Research, Springer, vol. 186(1), pages 429-442, June.

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    Keywords

    project management;

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