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Management

Student’s First Name, Middle Initial(s), Last Name

Institutional Affiliation

Course Number and Name

Instructor’s Name and Title

Assignment Due Date

Management
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1. Most of us have experienced trouble trying to find parking on campus even when we

have a parking permit. Having just recently taken the project management class, we

want to explore whether running a valet parking service would be profitable.

Our plan, like most naïve plans, is simple:

Step1: We will lease land for parking about three miles away (east of I-805).

Step2: Employ students to drive the cars from UCSD campus to our off-site parking

lot, and back when requested.

Step3: profit!!

a) At first glance, does this plan pass the “smell test”. That is, does the plan make

economic sense? Why or why not? [argue in favor of your position using

approximate (order-of-magnitude) estimates why the plan does or does not make

sense]

I think this plan can be implemented and this service will create huge financial benefits.

Because many students will face the problem of not finding parking Spaces in class, most

parking Spaces in different time pairs will be occupied by other students. Therefore,

according to the large number of students' needs, the price of renting parking lots is

evaluated, how many students can use this service, and the price of hiring students is

estimated. The plan makes economic sense.

b) Since the service is superior to that offered by the UCSD parking services, we

may be able to charge a higher price. How much is the minimum you need to

charge each car per hour to break-even?

Let's say the parking lot costs $50,000 a year and hire students to drive to campus for $10

round trip. Also, assuming that UCSD has an enrollment of about 15,000 students, 15%

of them can't find a parking space, that means 2,250 students can't find a parking space.

Based on the balance of payments, 50000+1500*10*365=5525000.One day

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revenue=10000/8=1250. 1250/1500=0.84$/H

2. A project requires $10 million dollars in initial investment. The projected revenue is

$3 million dollars per year for the next 5 years. If we apply a discount factor of 5%,

what is

a) the break-even period?

Year 1 2 3 4 5

Cash flow -10 3 3 3 3

Projected -10 -7 -4 -1 2

revenue

Break-even period starts in the third year

b) the discounted cash-flow and the NPV of the proposed project?

NPV=PRESENT VALUE OF CASH INFLOWS-CASH OUTFLOWS

NPV= 2.9882
Discount factor 5%
c) the IRR of the project?

N
CF
IRR= N
-1 npv=0
√ I

IRR= 15%

3. You are managing a lab which tests prototypes for compliance with safety

regulations. A project manager has given you two prototypes to test, A and B, for

his project, with the goal to identify at least one that meets the safety regulations.

You calculate that prototype A has 30% likelihood of meeting the regulations and B

has 40% chance of meeting the regulations. The profits (value) if we meet the

regulations using any prototype is $100, and the value if we do not meet the

regulation is $0. Suppose the cost of testing each prototype is $20. [Note that we only
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want to identify one prototype, and there is no additional value in identifying two

prototypes that comply with regulations]

a) If we could test only one prototype, which prototype would we test? What is

the expected value of following this strategy (of testing only one prototype)?

For A: Expected V= 30-20=10

For B: Expected V=40-20=20

So we test B

b) Suppose we decide to test both prototypes simultaneously, and then choose

the prototype that complies with the safety regulation. What is the expected

value of following this strategy?

If we test both of them simultaneously,

For A: 100*30%-40=-10

For B: 100*40%-40=0

So we choose B, because if we choose A, we will lose.

Suppose we build in enough flexibility in our resource scheduling and follow the

following sequential strategy: we can test one prototype and then continue onto test the

next one only if the first one didn’t meet the regulations. What is the value of following

this sequential strategy if

c) We test A first. And if A doesn’t meet the guidelines, we test B

Let's test A first. If A doesn't meet our requirements, let's test B again.

For A: Expected Revenue = (100*30%-70%*0)-20=10

d) We test B first, and if B doesn’t meet the guidelines, we test A.

Let’s test B first. If B doesn’t meet our requirements, let’s test A again.

For B: Expected Revenue = (100*40%-60%*0)-20=20

[Note that to undertake this sequential strategy we need to be able to tentatively schedule
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resources for the second test, with the understanding that there is a non-zero chance that

the resource would not be utilized and hence would have to re-allocated. Hence the

strategy requires flexibility in resource scheduling]

4. As a project manager, you have to select one of four possible designs for a phone

that your firm is creating. The first two designs D1 and D2 are similar to previously

used designs and you believe will have values that are normally distributed with

mean 80 and standard deviation 5.

The third and fourth designs D3 and D4 are both novel and you believe they will

both have value that is normally distributed with mean 70 and standard deviation

30.

a) If you were allowed to test only one design, which design will you test? What is

the expected value (not counting the costs) of your design?

I will test D1,D2.So we get the expected value is 80.01

b) If you were allowed to test only three designs in parallel, with the goal of finally

choosing one of these tested designs as the final one, which three designs will you

test? What is the expected value (not counting the costs) of your chosen set?

Answer

 i will test A, C and D. The reason is checking c and d will give the

organisation a confirmation that nee made design will not be acceptable by

the customers alot as there js a large deviation in the results. What the

organisation can do is looiing for the A thag will give more positive results

as customers are using the similar design in their past as well /9 connecting

with them will bw more easy and deliver results to them.

c) Explain the intuition behind your chosen design set [Specifically, are all the tested

designs high risk, or are all of them lower risk. And what is the intuitive purpose
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of each of the designs you choose to test]

Answer

For testing, Group A and B, less risk will be there as standard deviation is less

what means customers perception and preferences has less deviations as

compared to the last customers are using while, for group C and D, high risk will

be there due to increased standard deviation.

It will be around 94.00

Use the simulation hosted at https://sanjiverat.com/ptesting to answer the above questions

5. You have signed a contract that gives you a payment for 100,000 for a project.

Suppose this project can be broken down into two serial activities – A and

B. The time taken by activity A is uniformly distributed between 10 days and 60 days.

Activity B takes exactly 50 days to complete if worked on by 2 people.

But you may choose to have more people work on activity B and reduce the time it takes

to complete. Specifically, you calculate that it would take 40 days to complete if worked

on by 3 people.

The extra cost of this additional person for working on activity B is $1500

The contract you signed with your client is structured so that a quadratic penalty gets

deducted based on how many days you take to complete the project.

Specifically, if your project gets completed in 70 days, your net payment would be

$100,000 minus (70)2 = 100,000 – 4900 = $95,100

Similarly, if your project gets completed in 80 days, your net payment would be $100,000

minus (80)2 = 100,000 – 6400 = $93,600

a) What is the expected value you receive if you choose to use only 2 people on

activity B?

So,the expected value you receive if you choose to use only 2 people on
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activity B

1If activity A takes 10 days so activity A and activity B took a total of 10 + 50 =

60 days

The value= 100000-60*2=97500$

2If activity A takes 60 days so activity A and activity B took a total of 60 + 50 =

110 days

The value= 100000-110*2=87900$

b) What is the expected value you receive if you choose to use 3 people on activity

B?

The expected value you receive if you choose to use 3 people on activity B

(1) 100000-50*2-1500=96000$

(2) 100000-100*2=88500$

You decide to run the project as follows: you will defer making the choice of whether or

not have 3 people work on activity B.

Specifically, you decide that if activity A takes less than 20 days to complete, then you

will use only 2 people to work on activity B. if it takes more than 20 days to complete,

then you will use 3 people to work on activity B.

c) What is the expected value of following the above strategy?

The expected value you receive if you choose to use 3 people on activity B

The expected value of following the above strategy

Activity A takes 20 days, and activity B takes 50 days

Expected value= 100000-70*70=95100$

Change the number of days you defer the choice from 20 days (as give above) to other

values. For instance, try deferring the choice for 25 days, 30 days, 35 days, ….
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d) From the above, how many days should we defer the choice?

For this part, we get the test my intuition is correct that the risk is low, so we get 25days

during part’s choice. We give above to other values. For instance during this 50 days we

get activity B part to use value of following this statement. So of course we get the

expected value 25 days during this activity part intuition. So the expected by this point is

25days.

e) Finally, will the optimal length of time you delay making the choice increase or

decrease if the cost of the additional person is $1800 (instead of $1500 that you

used for your prior questions).

If activity A takes 25days the total we take is 75 days. The longer we delay, the less we

will earn.

Question 6 and 7 (attached because of formulae)

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Question 7
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Question 8

Answer

Cost per thousand (CPM), also called cost per mille, is a marketing term used to denote the

price of 1,000 advertisement impressions on one web page.

If a website publisher charges $2.00 CPM, that means an advertiser must pay $2.00 for every

1,000 impressions of its ad. The "M" in CPM represents the word "mille," which is Latin for

"thousands."

KEY TAKEAWAYS

 Cost per thousand (CPM) is a marketing term that refers to the cost an advertiser pays per

one thousand advertisement impressions on a web page. 

 An impression is a metric that counts the number of ad views or viewer engagements that

an advertisement receives.

 CPM is one of several methods used to price online ads; other methods include cost per

click (CPC) and cost per acquisition (CPA).

 Disadvantages of using CPM include incorrectly counting impressions due to duplicate

views, ads that fail to load, and advertising fraud.