HOMEWORK 7, Agribusiness Project Management, AGBU 515, Summer 2017

All the problems must be neatly handwritten and stapled together. Sloppy homework assignments
will be penalized.

You MUST submit every homework assignment completed 100% to be eligible to take the
upcoming exam. All homework assignments MUST be done on your own. No collaboration is
allowed. You can talk to the instructor or the TA if you have questions. SHOW ALL WORK.

Due: 18:25 pm, August 11

Late homework: no credit will be given, however, you still must submit it
Submit to: Teaching assistant
Total points possible: 100

Problem 1 (15 points)

Your company is the primary contractor and in your contract is penalty $1000 for each day you deliver
late. As a project manager you need to decide which subcontractor to use for a critical activity. Your
aim is to minimize your expected cost.
You have to choose between two candidate companies:
One subcontractor company has offered lower cost ($110 000). You estimate that there is 50%
chance that this subcontractor can delay the delivery for 90 days.
Second subcontractor company has offered higher cost ($140 000). You estimate that there is
10% chance that this subcontractor can delay the delivery for 30 days.
Use decision tree and EMV calculation define which subcontractor has to be selected for your project.
Draw decision tree diagram and calculate EMV for this case.

Problem 2(15 points)

Project Risks 1 - Weather: There is a 25% chance of excessive snow fall thatll delay the construction
for two weeks which will, in turn, cost the project $80,000.
Project Risks 2 - Cost of Construction Material: There is a 10% probability of the price of construction
material dropping, which will save the project $100,000.
Project Risks 3 - Delivery Delay: There is a 5% probability of construction coming to a halt if the
delivery from a vendor will be late. The impact would lead to a loss of $150,000.
Calculate the EMV for each project risks. Also, calculate the projects EMV based on those project
risks.
Problem 3(15 points)
In this scenario, you can either:
Develop the new software: To develop the new software, the associated cost is $500 000.
Buy the new software: To buy the new software, the associated cost is $750 000.
Stay with the legacy software: If the company decides to stay with the legacy software, the
associated cost is mainly maintenance and will amount to $100 000.
The Buy the New Software and Develop the New Software options will lead to either a successful
deployment or an unsuccessful one.If the deployment is successful then the impact is zero, because the
risk will not have materialized. However, if the deployment is unsuccessful, then the risk will
materialize and the impact is $2 million. In case of developing new software there is 60% probability
for successful deployment and 40% probability for unsuccessful deployment. In case of buying new
software there is 95% probability for successful deployment and 5% probability for unsuccessful
deployment.
The Stay with the Legacy Software option will lead to only one impact, which is $2 million, because
the legacy software is not currently meeting the needs of the company. In this example, we have
assumed that the company will have growth.
Draw decision tree diagram.Calculate EMV connected with each decision.What will be your choice?

Problem 4 (15 points)

During last year your company decreased its competitiveness in the local market. You are assigned to
manage a project with the aim to find the reasons of low competitiveness and propose effective
solutions to improve situation.
Among other tools and techniques you have to use also Cause Effect diagraming technique.
Prepare the relevant Fishbone diagram and use at least the following spine bones inclined to the main
bone: Staff, Corporate structure, Management, External environment.
Present inlets for each of the main bones of the fishbone diagram.

Problem 5 (15 points)

Your company is losing money because of return of your dairy product from the retail shops. It happens
73 times during last month. There are various reasons for return: late arrival to the shops (39 times),
improperly filled-in dispatch documents (6 times), poor quality of the delivered product (20 times) and
unsold product due to low demand for your product (8 times). Your additional investigations revealed
that 39 late arrivals to the retail shops are caused by the following reasons: bad condition of road
network (32 times), car breaks (4 times), weather conditions (3 times).
Arrange the available data accordingly, fill-in the below two tables, construct Pareto diagram and
analyze the output information.
Table 1

Causes Occurrences % Count

Total:

Table 2

Causes Occurrences % Count Cumulative %

Problem 6 (15 points)

You have found that your company has unacceptable high losses on the grinded meat packaging line.
The target weight is 454 grams and the allowable margin of error is +/- 2 grams. At periods during
production you asked operators to record the package weight in grams (PW/G). You also asked them to
record fill speed in units per minute (FS/M). This will enable us to establish if a relationship exists
between consistency and weight (effectiveness) and speed (efficiency). Any units weighing less than 452
grams is shorting the customer and may lead to regulatory issues. Any units weighing over 456 grams is
giving product away unnecessarily and waste.
The following data were provided to you from operators:
Unit Weight, Units per min Unit Weight, Units per min
grams grams
1 458 72 16 454 75
2 452 79 17 454 75
3 454 75 18 459 73
4 454 75 19 454 74
5 453 77 20 453 76
6 455 74 21 452 77
7 454 75 22 454 76
8 452 76 23 453 77
9 458 74 24 451 79
10 453 79 25 456 75
11 456 74 26 454 75
12 453 78 27 458 73
13 455 75 28 453 77
14 455 75 29 456 73
15 455 74 30 454 75

Use data presented in the table above related to grinded meat packaging process to construct Control
Chart, which also is known as Run Chart, of that process. Plot sequential 30 measurements/observations
on X-axis and weight data on Y-axis. Draw upper and lower limits lines.
Analyze the received pattern, make your recommendations related to the packaging process.

Problem 7 (10 points)

Painting new auto bodies is a multistep process. There is an electrocoat that resists corrosion, a primer,
a color coat and a gloss coat. A quality study for one paint shop produced this breakdown of the primary
problem types for those autos whose paint did not meet the manufacturers standards:
 Category Frequency
Electro coat uneven redone 4
Poor adherence of color to primer 5
Lack of clarity in color 2
Orange peel texture in color coat 32
Orange peel texture in gloss coat 1
Ripples in color coat 28
Ripples in gloss coat 4
Uneven color thickness 19
Uneven gloss thickness 5
Construct a Pareto chart and diagram. Define which stage of the painting process should you look at
first?