CPM PERT

It is a deterministic model under which result is It is a probabilistic model under which result is
ascertained in a manner of certainly. estimated in a manner of probability.

It deals with the activities of precise well known It deals with the activities of uncertain time
time.

It is used for repetitive jobs like residential It is known for non-repetitive jobs like planning and
construction. scheduling of research programmes.

It is activity oriented in a much as its results are It is event oriented in as much as its results are
calculated on the basis of the activities. calculated on the basis of events.

It does not make use of Dummy activities. It makes use of Dummy activities to represent the
proper sequencing of the activities.

It deals with costs of a project schedules It has nothing to do with cost of a project.
minimisation.

It deals with the concept of crashing. It does not deal with concept of crashing.

Its calculation is based on one type of time It finds out expected time of each activity on the
estimation that is precisely known. basis of three types of estimates, viz, optimistic
time, pessimistic time and most likely time.

It can be used as a control devices as it requires It is used as an important control device as it assists
repetition of the ensure evaluation of the project the management in controlling a project by
each time the changes are introduced to the constant no view of the delays in activities
network

It does not make use of the statistical devices in
the determination of the time estimates.
It makes use of the statistical devices, standard
deviation variance, probability, and normal
distribution table in the determination of
probabilities of completing or not completing a
project or a path within a given time

Interest: is the price that is payable for using the money of another. It is payable by a borrower to the
lender of a certain money. "The price payable at a certain rate per cent per annum or otherwise by a
borrower for using certain money of the lender for a certain period.”

Simple interest- it is the type of interest which is calculated always at a fixed rate on the original
amount of the principal borrowed.

I=Pit

A=P+ I
=P+Pit, P(1+it) I=A-P

Compound interest is one which is calculated at a given rate percent of the accumulated sum of the
principal and the earlier interest left unpaid.
An=P(1+i)n
Effective rate of interest= E(1+I)n-1
In mathematics, the determinant of a matrix can be defined as a numerical value obtained from a
square matrix of the coefficients of certain unknown variables enclosed by two bars by the process of
diagonal expansion to tell upon a given algebraic system.

A Cofactor A cofactor is a scalar value associated with a particular element of a square matrix. The
cofactor of an element 𝑎𝑖𝑗 of a matrix A, denoted as cof(𝑎𝑖𝑗), is calculated by removing the row and
column containing the element 𝑎𝑖𝑗 and then computing the determinant of the remaining submatrix.

Minor: By the minor of an element of a determinant we mean the subsquare-determinant of the given
determinant along which the particular element does not exit. It is obtained by deleting the row and
the column on which the particular element lies.

Properties of determinant:

1. The value of the determinant remains unchanged even if its rows and columns are interchanged.
2. If any two rows or columns of determinants are interchanged, the numerical value of the
determinant remains the same but with the opposite sign.
3. If any row or column of the determinant consists of zeroes only the value of the determinant
becomes zero.
4. If any rows or columns of the determinant are identical then the value of the determinant
becomes zero
5. If each determinant in a row or a column of a determinant is multiplied by a constant k, then the
value of the new determinant k is k times the value of the original determinant.
6. If every element of row and column consists of sum or difference of two quantities, then the
determinant can be expressed in sum or difference of two determinants of same order.

A diagonal matrix is a square matrix where all the elements outside the main diagonal are zero. The
main diagonal is the set of elements that starts from the top left of the matrix and extends diagonally
to the bottom right.

Mathematically, a diagonal matrix can be represented as:

A matrix A is said to be a diagonal matrix if aij = 0 for i ≠ j .

Example,

[1 0 0

020

0 0 3] is a diagonal matrix.
Integration by parts is a technique used in calculus to evaluate the integral of a product of two
functions. The formula for integration by parts is derived from the product rule for differentiation. It
states:

∫ u dv = uv - ∫ v du

where:

∫ denotes integration

u and v are differentiable functions of a variable

du and dv are differentials of u and v, respectively

This formula allows you to integrate a product of two functions by breaking it down into simpler
components and applying the formula iteratively if necessary. The choice of which function to
designate as u and which as dv depends on simplifying the integral as much as possible. Typically, u is
chosen such that its derivative, du, simplifies the integral when differentiated, and dv is chosen so that
it can be easily integrated.

A deferred annuity is a type of annuity contract where the payments to the annuitant (the person
receiving the annuity) begin at a future date, rather than immediately upon purchase. In other words,
the annuitant makes payments or contributions into the annuity during an accumulation phase, and
then receives payments back during the distribution phase, which starts at a later predetermined date.

Deferred annuities can be fixed or variable.

Fixed Deferred Annuity: In a fixed deferred annuity, the annuity owner pays premiums to the insurance
company, and in return, the insurance company guarantees a fixed interest rate for the accumulation
period. The accumulated value grows over time based on this fixed interest rate, and the annuitant
receives regular payments or a lump sum at the start of the distribution phase.

Variable Deferred Annuity: With a variable deferred annuity, the annuity owner's premiums are
typically invested in a selection of investment options, such as mutual funds or separate accounts
offered by the insurance company. The value of the annuity fluctuates based on the performance of
these underlying investments. Therefore, the eventual payout during the distribution phase can vary
based on market performance.

Compound interest is a method of calculating interest where interest is added to the initial principal
amount, and then interest is earned on the new total. In other words, it's interest on interest. This
leads to the exponential growth of an investment or a debt over time.

The formula for calculating compound interest can be represented as:

Where:

A is the future value of the investment/loan, including interest

P is the principal amount (the initial amount of money)

r is the annual interest rate (in decimal)

n is the number of times that interest is compounded per unit time (typically compounded annually,

quarterly, monthly, etc.)

t is the time the money is invested or borrowed for, in years.

In the context of linear programming, a slack variable is introduced to convert inequalities into
equations in order to solve linear programming problems using the simplex method.

Optimistic time, in project management and scheduling, refers to the shortest possible time required
to complete a specific task or activity under ideal conditions. It represents the best-case scenario or
the most optimistic estimate for how long a task could take. When estimating project durations using
techniques like PERT (Program Evaluation and Review Technique), three time estimates are often used:

1. Optimistic Time (O): The shortest possible time a task could take if everything goes perfectly.

2. Most Likely Time (M): The best estimate of the time required to complete a task, considering typical
conditions and circumstances.

3. Pessimistic Time (P): The longest time a task could take if everything goes wrong or unexpected
delays occur.

In the context of the Program Evaluation and Review Technique (PERT), an "event" refers to a
significant point or milestone in a project's timeline. PERT is a project management tool used to
represent the tasks involved in completing a project, along with their dependencies and estimated
durations.

In PERT, a project is represented as a network of activities connected by arrows that represent the flow
and dependencies between tasks. Each task is represented as a node or a box in the network, and
events are depicted as points in time where specific actions occur or milestones are reached. Events
in PERT represent the beginning and end points of activities. They mark the points in time when a task
starts or finishes, serving as reference points for understanding the flow of work and the sequence of
activities in the project.

In the context of continuous compounding, annuities can be classified into several types based on
whether they are perpetuities or finite annuities, and whether they involve future value (FV) present
value (PV) calculations. Let's break them down:

1. Perpetuity:

• A perpetuity is an annuity that continues indefinitely, with payments occurring forever at regular
intervals.

• In terms of continuity, a perpetuity can be considered continuous because payments are assumed to
be made continuously over an infinite time period.

• Examples include pensions, certain types of bonds, and perpetually paying securities.

• For perpetuities, both future value (FV) and present value (PV) can be calculated using
continuous compounding formulas.

2. Future Value (FV) Compounded Continuously:

• This refers to calculating the future value of an annuity with continuous compounding.

• In continuous compounding, interest is calculated and added to the principal an infinite number of
times over time.

3. Present Value (PV) Compounded Continuously:

• This refers to calculating the present value of an annuity with continuous compounding.

• In continuous compounding, future cash flows are discounted back to their present value at an
infinite number of intervals.

In Critical Path Method (CPM), dummy activities are a tool used to represent logical relationships
between tasks or activities in a project network diagram. These dummy activities serve as placeholders
that help to accurately depict the flow of work and the dependencies between various project
activities. Here's a note on dummy activities in CPM:

1. Purpose of Dummy Activities:

• Dummy activities are introduced in a project network diagram to represent dependencies between
tasks when there is no actual work being performed.

• They are particularly useful when there are complex relationships between activities, such as when
multiple activities must start or end simultaneously, or when there are overlapping activities.

2. Representation in Network Diagrams:

• Dummy activities are usually represented as dashed lines in project network diagrams.

• They do not consume any resources or time, but they serve to establish the logical sequence of
activities and ensure that the network diagram accurately reflects the project's workflow.

3. Types of Dummy Activities:

• Start-to-Start (SS) Dummy Activities: These dummy activities indicate that the start of one activity is
dependent on the start of another activity. They ensure that two activities start simultaneously.

• Finish-to-Finish (FF) Dummy Activities: These dummy activities indicate that the completion of one
activity is dependent on the completion of another activity. They ensure that two activities finish
simultaneously.

• Start-to-Finish (SF) Dummy Activities: These dummy activities indicate that the start of one activity
is dependent on the completion of another activity. They ensure that the second activity finishes as
soon as the first activity starts.

4. Use Cases:
• Dummy activities are commonly used in situations where activities have complex dependencies that
cannot be represented using simple precedences.

• They are also used to prevent ambiguity in the network diagram and to ensure that the critical path
of the project is accurately identified.
In Linear Programming (LP), a constraint function is a mathematical representation of the restrictions
or limitations placed on the decision variables in the optimization problem. These constraints define
the feasible region, which is the set of all possible solutions that satisfy all the given constraints
simultaneously. Here's a short note on constraint functions in Linear Programming Problems (LPP):

Definitions: A constraint function in an LP model is an equation or inequality that expresses a condition

that must be satisfied by the decision variables. Each constraint function typically involves one or more
decision variables and constants.

Formulation: Constraint functions are formulated based on the problem's requirements, limitations,
or resource availability .In a standard LP problem, constraint functions are usually expressed as linear
equations or inequalities. This means that decision variables appear only to the first power and are
not multiplied or divided by each other.

Types of constraints: Equality Constraints: These are constraints expressed as linear equations, where
the left-hand side is equal to the right-hand side. For example: ax+by=c.

Inequality Constraints: These are constraints expressed as linear inequalities, where the left-hand side
is less than or equal to or greater than or equal to the right-hand side. For example: ax+by≤c or
ax+by≥c.

Pessimistic time refers to the longest possible time which is likely to take place to complete an activity
when all sorts of complicacies and unusual delays take place.

Feasible Solution - A solution which satisfies the constraints and non-negativity conditions of a general
LPP is called a feasible solution.

A parametric equation is one where the x and y coordinates of the curve are both written as functions
of another variable called a parameter.

A function is called many-to-one (sometimes written 'many-one') if some function output value
corresponds to more than one input value.

Sinking fund: Generally in a large organization a desired amount of money is accumulated to replace
the old assets like machinaries, plants etc. in future. This fund is called Sinking fund. To create the
sinking fund a fixed sum is kept aside annually to accumulate at compound interest. This fund is also
used to pay off the loans on a future date. This sinking fund accumulates through annuities, to create
a desired capital and hence, it can be treated like annuity problems

AMORTISATION: When an annuity is split up into two parts representing the portion of the interest
and the portion of the principal included therein in order to keep pace with the accounting principle
of dividing an amount into two portions of revenue nature and capital nature respectively, it is called
amortisation of principal.

Characteristics of annuity(1) Annuity is the periodic instalments of some amount.(2) Time interval is
fixed between two consecutive instalments.(3) Instalments are due either in the beginning or at the
end of the period. When the instalments are due at the end of the period the Annuity is called Annuity
certain due immediate and when the instalments are due at the beginning of the period the Annuity
is called Annuity due prepaid immediate.(4) Interest is compounded at the end of each period.
Annuity Contingent An annuity which is payable till the happening of a certain contingent event (i.e.
an event which may or may not take place within a stipulated time viz. death, marriage, completion of
study etc.) is called contingent annuity. In such a case the value of n is not given though the value of 't'
might be indicated. However, for a contractual obligation, the value of 'n' is estimated with a fair degree
of accuracy, keeping in view the nature of the problem.

Annuity Perpetual An annuity which is payable for ever without any stop is called perpetual annuity.
In such a case the value of n is neither stipulated nor estimable, although, the value of t might be
indicated. The examples of such annuities are award of prizes, grant of aids, sanction of scholarships
etc. of perpetual nature.

Annuity Certain :An annuity which is payable for a certain number of times is called annuity certain.
In such a case ,the values of n (i.e. the number of years) and t (i.e. the number of times the annuity is
payable in a year)are mentioned in clear terms.

Annuity Deferred: An annuity, the enforcement of which is deferred or delayed for certain periods to
wait upon the fulfilment of certain conditions is called an annuity deferred. Thus, if in 2011 it is agreed
to pay an annuity of 1,500 for a certain or uncertain periods after 2 years, the payment of such
annuities shall start from the year 2013. The enforcement of such annuities are delayed till the
fulfilment of certain conditions viz. attainment of the age of majority of the beneficiary accumulation
of the sum to a required extent etc

Annuity due prepaid immediate :An annuity which is payable at the beginning of each period like that
of insurance premium is called annuity due prepaid immediate .For example, payment of recurring
deposits in a bank or a post office, payment of instalments of LIC of India, etc.

Present value or Discounting Concept is just the opposite of the compounding concept which we have
also discussed in the chapter Annuities. According to time value of money concept, the ich w money
received today is less valuable than tomorrow or a rupee received today is more valuable than the
rupee received tomorrow. Suppose, a deposit of 7,00,000~wil give a matured value of₹ 1,10,000 after
one year (rate of interest being 10% p.a.). It indicates that₹ 1,00,000 is the present value of ₹ 1,10,000
which shall be received after one year.

Function: A function f from a set A to set B is a rule of associating elements of set A to elements of set
B such that every element in A is uniquely associated with some elements in B. If f is a function from
set A to set B, then we write 𝑓:𝐴→𝐵. The set A is the domain of f and the set B is the co-domain of f

Real function: 2 If the domain and co-domain of a function are subset of R (set of all real numbers). It
is called a real valued function. Let A and B be two non-empty subsets of R, and let 𝑓:𝐴→𝐵 be a real
function. Let 𝑥 be an element of A. The element in B that is associated to 𝑥 by 𝑓 is denoted by 𝑓(𝑥) and
is known as the image of 𝑥 under 𝑓 or the value of 𝑓 𝑎𝑡 𝑥. Sometimes we also say that 𝑓 takes the
value 𝑓(𝑥) at 𝑥..

Range of a function The range of a function 𝑓:𝐴→𝐵 is the set of all values taken by 𝑓 𝑖.𝑒. it is the set
of images of elements in domain. Or Range (𝑓)={𝑓(𝑥)|𝑥∈𝐴| Clearly Range (𝑓)⊂𝐵.

Domain and Range of Real Functions:Domain of a function: Generally real functions in calculus are
described by formula and their domains are not explicitly stated. In such cases, the domain of function
f is the set of all real numbers x for which f(x) is a real number, i.e. f(x) is meaningful. For example, if
f(x)=√2−𝑥, then f(x) is a real number for 𝑥≤2. For 𝑥>2, f(x) is not real. So domain of f(x) is the set of all
real numbers less than or equal to 2 i.e. (−,∞,2).