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Good Homes Construction Company is about to begin the construction of a large new home. The company's President, Michael Dean, is currently planning the schedule for this project. Michael has identified the five major activities (labeled A, B, ..., E) that will need to be performed according to the following project network.

Good Homes Construction Company is about to begin the construction of a large new home. The company's President, Michael Dean, is currently planning the schedule for this project. Michael has identified the five major activities (labeled A, B, ..., E) that will need to be performed according to the following project network.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Problem 4 Good Homes Construction Company is about to begin the construction of a large new home. The company's President, Michael Dean, is currently planning the schedule for this project. Michael has identified the five major activities (labeled A, B, . . ., E) that will need to be performed according to the following project network. START Activity A B с D E A b) Normal Time He also has gathered the following data about the normal point and crash point for each of these activities. 3 weeks 4 weeks B 5 weeks 3 weeks 4 weeks Crash Time 2 weeks 3 weeks 2 weeks 1 week 2 weeks Normal Cost D $54,000 $62,000 $66,000 $40,000 $75,000 E Crash Cost $60,000 $65,000 FINISH $70,000 $43,000 $80,000 These costs reflect the company's direct costs for the material, equipment, and direct labor required to perform the activities. In addition, the company incurs indirect project costs such as supervision and other customary overhead costs, interest charges for capital tied up, and so forth. Michael estimates that these indirect costs run $5,000 per week. He wants to minimize the overall cost of the project. Therefore, to save some of these indirect costs, Michael concludes that he should shorten the project by doing some crashing to the extent that the crashing cost for each additional week saved is less than $5,000. a) To prepare for analyzing the effect of crashing, find the earliest times, latest times, and slack for each activity when they are done in the normal way. Also, identify the corresponding critical path(s) and project duration. Use the linear programming approach to determine which activities should be crashed and by how much to minimize the overall cost of the project. How much money is saved by doing this crashing?
Transcribed Image Text:Problem 4 Good Homes Construction Company is about to begin the construction of a large new home. The company's President, Michael Dean, is currently planning the schedule for this project. Michael has identified the five major activities (labeled A, B, . . ., E) that will need to be performed according to the following project network. START Activity A B с D E A b) Normal Time He also has gathered the following data about the normal point and crash point for each of these activities. 3 weeks 4 weeks B 5 weeks 3 weeks 4 weeks Crash Time 2 weeks 3 weeks 2 weeks 1 week 2 weeks Normal Cost D $54,000 $62,000 $66,000 $40,000 $75,000 E Crash Cost $60,000 $65,000 FINISH $70,000 $43,000 $80,000 These costs reflect the company's direct costs for the material, equipment, and direct labor required to perform the activities. In addition, the company incurs indirect project costs such as supervision and other customary overhead costs, interest charges for capital tied up, and so forth. Michael estimates that these indirect costs run $5,000 per week. He wants to minimize the overall cost of the project. Therefore, to save some of these indirect costs, Michael concludes that he should shorten the project by doing some crashing to the extent that the crashing cost for each additional week saved is less than $5,000. a) To prepare for analyzing the effect of crashing, find the earliest times, latest times, and slack for each activity when they are done in the normal way. Also, identify the corresponding critical path(s) and project duration. Use the linear programming approach to determine which activities should be crashed and by how much to minimize the overall cost of the project. How much money is saved by doing this crashing?
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