Learn Italian: Il direttore ha letto la relazione ieri. - The director read the report yesterday.

Relazione is a versatile word. While it often means "relationship" (such as a romantic relationship or diplomatic relations), in a business, academic, or formal context, it is the standard word for a "report" or "written account."

Since the action happened ieri (yesterday), why use the passato prossimo (ha letto) instead of the passato remoto (lesse)?

In most of Italy, the passato prossimo is the standard tense for spoken and everyday written Italian, even for fully completed actions that happened recently like yesterday. The passato remoto is generally reserved for events that feel psychologically or historically distant, or for formal literature. (Note: in parts of Southern Italy, the passato remoto is sometimes used for recent events, but ha letto is standard and understood everywhere).

Can I change the position of ieri in this sentence?

Yes, time adverbs like ieri are quite flexible. Placing it at the end is very natural, but you can also put it at the beginning to set the scene or add emphasis: Ieri il direttore ha letto la relazione. Just be careful not to separate the verb from its direct object—avoid saying Il direttore ha letto ieri la relazione.