Download MATH 251 ACTIVITY 1:

MATH 251 ACTIVITY 7:
WHY:
Time/Cost Tradeoffs in a Project (“Crashing”)
One of the uses of the PERT/CPM method is in making decisions about using additional resources to speed up
activities in order to complete a project in reduced time. This process is referred to as crashing . The goal is to
achieve a particular project duration at lowest cost. It can also be used to find the shortest possible duration for a
fixed cost (over the normal cost).
LEARNING OBJECTIVES:
1.
Work as a team, using the team roles.
2.
Be able to determine the least expensive way to reduce the time of a project to a specified goal.
3.
Be able to determine the fastest schedule possible for a fixed (additional) cost.
CRITERIA:
1.
Success in completing the exercises.
2.
Success in working as a team
RESOURCES:
1.
The handout "Cost-time tradeoffs” (but really just the first 1 1/2 pages).
2.
Your text: section 5.10
3.
Microsoft Excel and the templates (from the text CD – available on the Public server and via Blackboard) CPM-Deadline.xls
and CPM-Budget.xls and the “Klonepalm basic.xls” template (for finding critical path and normal & fully crashed schedules)
3.
45 minutes
PLAN:
1.
Select roles, if you have not already done so, and decide how you will carry out steps 2 and 3
2.
Work through the exercise given here - be sure everyone understands all results
3.
Assess the team's work and roles performances and prepare the Reflector's and Recorder's reports including team grade.
EXERCISE:
[Based on L&P exercises #5.45 &5.47]
QP Dolls, Inc. has developed a new doll it feels could turn into a “collector’s item” through proper advertising on
cable TV. The PERT/CPM network shown in the PERT/CPM network for problem 45 models the activities ( or work
packages) of the project. Distribution of the total budgeted cost of $5,280,000 and expected completion times (in weeks) for
each of the work packages are summarized in the table for problem 45.
Problem 45
Expected Budgeted
Work Package
Time
A. Conduct market analysis
6
B. Secure facilities/equipment
4
C. Hire manufacturing supervisor/foremen
3
D. Purchase manufacturing materials
3
E. Hire/train workers
10
F. Manufacture various prototypes
2
G. Complete full-scale production
6
H. Develop advertising campaign
6
I. Prepare cable TV infomercials
8
Cost
$ 240,000
$ 300,000
$ 150,000
$ 540,000
$ 900,000
$ 300,000
$1,350,000
$ 450,000
$1,050,000
Management is giving some thought to putting extra resources into the project so that it can be
completed within one-half year (26 weeks). Accordingly, each work package has been studied, and a set of crash times in
weeks and costs has been developed.
A. Conduct market analysis
B. Secure facilities/equipment
C. Hire manufacturing supervisor/ foremen
D. Purchase manufacturing materials
E. Hire/train workers
F. Manufacture various prototypes
G. Complete full-scale production
H. Develop advertising campaign
I. Prepare cable TV infomercials
5
3
2
2
7
1
4
3
4
$ 300,000
$ 400,000
$ 240,000
$ 750,000
$1,440,000
$ 390,000
$3,200,000
$ 900,000
$2,600,000
1.) Construct the project network
2.) Find the duration for the project using normal times. Which activities are critical?
2.) Find the total cost and duration using all crash times. Which activities are critical?
3.) Plan a minimum-cost schedule of 26 weeks. Which activities are critical?
4.) Suppose QP budgets $6 million for this project. What is the minimum-time schedule? Which activities are critical?
CRITICAL THINKING QUESTIONS:(answer individually in your journal)
1.
If we are crashing a project without using the linear programming setup, why would we expect to look at critical activities –
and only at critical activities – first?
2.
We have not discussed (and will not) use of a project network model for actually managing a project (during the
implementation phase). How might it be useful? Would a Gantt chart, a network diagram, or a schedule with ES/EF –LS/LF
be more useful?
SKILL EXERCISES:(This is the assignment due next class) p312 # 21, 23, 24