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1) Company manufacturing plant and equipment for chemical processing is in the process of quoting

tender called by public sector undertaking. Help the manager to find the project completion time to
participate in the tender. Draw the Network, Find the Critical Path and Project Completion Time.

2) The following mortality rates have been observed for a certain type of light bulbs:
End of week
Probability
of
failure to date

0.09

0.25

0.49

0.85

0.97

1.00

There are a large number of such bulbs which are to be kept in working order. If a bulb fails in service, it
costs Rs. 3 to replace but if all the bulbs are replaced in the same operation, it can be done only for Rs.
0.70 a bulb. It is proposed to replace all bulbs at fixed intervals, whether or not they have burnt out, and
to continue replacing burnt out bulbs as they fail.
(a) What is best interval between group replacements?
(b) At what group replacement price per bulb, would a policy of strictly individual replacement
become preferable to the adopted policy?
4) A machine costs Rs. 500. Operation and maintenance costs are zero for the first year and increase by
Rs. 100 every year. If money is worth 5% every year, determine the best age at which the machine
should be replaced. The resale value of the machine is negligibly small. What is the weighted average
cost of owning and operating the machine?
MS Project The director of continuing education at Bluebird University has just approved the planning
for a sales-training seminar. Her administrative assistant has identified the various activities that must
be done and their relationships to each other, as shown in Table 1.

TABLE 1 Activities for the Sales-Training Seminar

ACTIVITY

IMMEDIATE
PREDECESSOR(S)

DESCRIPTION

Design brochure and course announcement.

Identify prospective teachers.

Prepare detailed outline of course.

Send brochure and student applications.

Send teacher applications.

Select teacher for course.

C, E

Accept students.

Select text for course.

Order and receive texts.

G, H

Prepare room for class.

Because of the uncertainty in planning the new course, the assistant also has supplied the
following time estimates for each activity.
TIME ESTIMATES (DAYS)
ACTIVITY

Optimistic

Most likely

Pessimistic

12

11

17

25

10

12

11

17

The director wants to conduct the seminar 47 working days from now. What is the
probability that everything will be ready in time?
5. The maintenance department for a large university requires 3,600 gal of paint annually for the
scheduled maintenance of its buildings and grounds. It has been estimated that the cost of placing an
order is $16 and the cost of holding inventory is 25 percent of the investment in inventories. The price is
$8 per gallon. The manager of maintenance wishes to determine an ordering policy for this item

Case
Moore Housing Contractors is negotiating a deal with Countryside Realtors to build six houses in
a new development. Countryside wants Moore Contractors to start in late winter or early spring
when the weather begins to moderate and build through the summer into the fall. The summer
months are a busy time for the realty company, and it believes it can sell the houses almost as
soon as they are ready--sometimes before. The houses all have similar floor plans and are of
approximately equal size; only the exteriors are noticeably different. The completion time is so
critical for Countryside Realtors that it is insisting a project management network accompany the
contractor's bid for the job with an estimate of the completion time for a house. The realtor also
needs to be able to plan its offerings and marketing for the summer. The realtor wants each house
to be completed within forty-five days after it is started. If a house is not completed within this
time frame, the realtor wants to be able to charge the contractor a penalty. Mary and Sandy
Moore, the president and vice president of Moore Housing Contractors, are concerned about the
prospect of a penalty. They want to be confident they can meet the deadline for a house before
entering into any agreement with a penalty involved. (If there is a reasonable likelihood they
cannot finish a house within forty-five days, they want to increase their bid to cover potential
penalty charges.)

The Moores are experienced home builders, so it was not difficult for them to list the activities
involved in building a house or to estimate activity times. However, they made their estimates
conservatively and tended to increase their pessimistic estimates to compensate for the
possibility of bad weather and variations in their workforce. Following is a list of the activities
for building a house and the activity time estimates:
1. Develop a CPM/PERT network for Moore House Contractors and determine the probability that
the contractors can complete a house within forty-five days. Does it appear that the Moores
might need to increase their bid to compensate for potential penalties?
2. Indicate which project activities Moore Contractors should be particularly diligent to keep on
schedule by making sure workers and materials are always available. Also indicate which
activities the company might shift workers from as the need arises.

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