I need a detailed explanation and assistance on how to solve this problem: The company decided that the project in the previous problem has to be expedited in order to optimize (minimize) the project cost. Expediting can be used to trade direct cost for indirect cost, since expediting the project reduces the indirect cost of the project by a fixed amount per day, while expediting an activity increases its total direct cost. The Accounting Department found that indirect costs amount to $100 per day, while activity direct costs as well as their normal and expedited times are given in the table below. Activity Normal Time (days) Expedited Time (days) Normal Cost ($) Expedited Cost ($) A 32 26 200 500 B 21 20 300 375 C 30 30 200 200 D 45 40 200 800 E 26 20 700 1,360 F 28 24 1,000 1,160 G 20 18 400 550 From this table you can compute the direct cost incurred by expediting an activity by one day. * What is the optimal time to complete the project? * What is the optimal project cost?
I need a detailed explanation and assistance on how to solve this problem:
The company decided that the project in the previous problem has to be expedited in order to optimize (minimize) the project cost. Expediting can be used to trade direct cost for indirect cost, since expediting the project reduces the indirect cost of the project by a fixed amount per day, while expediting an activity increases its total direct cost. The Accounting Department found that indirect costs amount to $100 per day, while activity direct costs as well as their normal and expedited times are given in the table below.
|
Activity |
Normal Time (days) |
Expedited Time (days) |
Normal Cost ($) |
Expedited Cost ($) |
|
A |
32 |
26 |
200 |
500 |
|
B |
21 |
20 |
300 |
375 |
|
C |
30 |
30 |
200 |
200 |
|
D |
45 |
40 |
200 |
800 |
|
E |
26 |
20 |
700 |
1,360 |
|
F |
28 |
24 |
1,000 |
1,160 |
|
G |
20 |
18 |
400 |
550 |
From this table you can compute the direct cost incurred by expediting an activity by one day.
* What is the optimal time to complete the project?
* What is the optimal project cost?
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