Concept explainers
A
Interpretation: The critical path and expected time to complete the project are to be determined.
Concept Introduction: Critical path refers to set of network activities sequence in the project needed to operate the project in least possible time.
B
Interpretation: Total project cost from day 1 till the completion of the project needs to be plotted. Implications of the time differential on the cash flows and project
Concept Introduction: The earliest start times refers to earliest time the activity of a scheduled project may begin equalizing earliest times of completing all its predecessor activities and latest start times used in PERT analysis describing a portion of the project must be started so that project finish time cannot be delayed.
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OPERATIONS MANAGEMENT CUSTOM ACCESS
- Your hospital has applied for certification as a level 1 stroke center. It is critical that the following project is completed in 18 weeks, before the next Joint Commission survey. Project activity times are listed in the table attached as an image. Determine the minimum cost-schedule for this project to be completed in 18 weeks. Assume a linear relationship between crash cost and crash time. For example, crash cost per week for activity A can be calculated as: ($650 - $200)/(4-2) = $225. 2. What is the difference in total project costs between the earliest completion time of the project using normal times and the minimum cost-schedule you found in part 1?arrow_forwardRefer to exercise #6 (page 54) in your textbook. Given the information in that exercise, which one should be Broken Arrow's first priority (you must include values for NPV/ROR/ROI and/or other information used to finalize your decision)? Calculate NPV for the project with first/highest priority. What is the maximum investment level for the project with the lowest priority that will lead to the same NPV as that for the project with first/highest priority (assume that the revenue stream does not change for that project)? Hint: You may use Excel's goal seek method (shown in the Chapter2_help file) to find the unknown investment value in year 0, given known revenue stream, final NPV value known from the project with highest priority, and rate of return (ROR) as 20%. Note: You must include values for NPV/ROR/ROI and/or other information used to finalize your priority. Answers provided without quantitative reasons will receive zero credits. Use the editor to format your answerarrow_forwardYou are the Project Analyst for Nairobi Project Advisors who have been asked by a client to advise on which of the following two projects should be accepted. Each project costs US$ 10,000 and each entails a 12% cost of capital: Year Expected Net Cash flows Project X Project Y 0 ($ 10,000) ($ 10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 a) Advise on which project should be undertaken using the Pay Back Period (PBP), Net Present Value (NPV), Internal Rate of Return (IRR), and Modified Internal Rate of Return (MIRR) assuming: i. The projects are independent ii. The projects are mutually exclusivearrow_forward
- Text: We can develop the CSR activities for Nestle company of planting trees and cleaning the lakes. This can be done by partnering with NGOs who are already working in these areas. The company can target several trees to be planted, for example, 100,000 in a quarter and take care of them till growth. To clean the lake, it can take the help of the National scientist of environmental science and fund the project to clean some of the lakes with the target number of again 50. A long-term solution must be used by them in cleaning the lakes, like stopping the sewage inflow and creating a small recycling plant before throwing water into the water bodies. The government, municipality, NGO, and environmental scientists are the main stakeholders involved. Here, the competition must not be created, but collaboration was be done between the competitors to help the society. The competitors will be other brands like Unilever and P&G. Progress indicators can be used as the number of trees…arrow_forwardNet Present Value Perform a financial analysis for a project using the Net Present Value method. Assume the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $200,000 in Year 1 and $30,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $100,000 each year in Years 2, 3, and 4. (1) Use a 9 percent discount rate and round the discount factors to two decimal places. Calculate the NPV and the year in which payback occurs.(2) Explain in plain language what the NPV means in this context.arrow_forwardhelp solvearrow_forward
- You are the project manager of the software installationproject in Table 7.12. You would like to find the minimum-costschedule for your project. There is a $1,000-per-week penaltyfor each week the project is delayed beyond week 25. In addi-tion, your project team determined that indirect project costsare $2,500 per week.a. What would be your target completion week?b. How much would you save in total project costs with yourschedule?arrow_forwardABC Limited Company is looking to invest in aproject. The cost of that project is $60,000 and the cash inflows and outflows of the project for 5 years, are shown in Table 1 below. The company’s WACC is 7%. Years Cash InflowsCash Outflows0 (Initial Outlay) $60,000.001 $20,000.00 $5,000.002 $21,000.00 $2,000.003 $22,000.00 $2,000.004 $14,000.00 $2,000.005 $10,000.00 $1,000.00 Profitability Index (PI) ii. Net Present Value (NPV), and estimate the Internal Rate of Return (IRR) of the Project using the given interest rate and 9%.arrow_forwardA project is scheduled to complete in six months duration. There are two activities in the project. The actual cost of Activity 1 is SAR 300,000 and that of Activity 2 is SAR 200,000. The planned value of these activities is SAR 280,000 and 150,000 respectively. On reviewing, the current project status is Activity 1 is 100% completed and Activity 2 is only 75% completed. (i) Perform the earned value calculations of the above project scenario and fill the given table. (ii) What do you infer about the project schedule and cost based on your calculations? Earned Value Planned Value Actual Cost Cost Variance Activity Scheduled Variance Cost performance Index Schedule performance Index Month 1arrow_forward
- A project is scheduled to complete in six months duration. There are two activities in the project. The actual cost of Activity 1 is SAR 300,000 and that of Activity 2 is SAR 200,000. The planned value of these activities is SAR 280,000 and 150,000 respectively. On reviewing, the current project status is Activity 1 is 100% completed and Activity 2 is only 75% completed. (i) Perform the earned value calculations of the above project scenario and fill the given table. Activity Month 1 Earned Value Planned Value Actual Cost Cost Variance Scheduled Variance Cost performance Index Schedule performance Index (ii) What do you infer about the project schedule and cost based on your calculations?arrow_forwardYou may need to use the appropriate technology to answer this question. Due to population growth in the area, the new Liberty High School has just opened in a local school district. The athletic director at Liberty High is planning the launch of the school's track and field team. The first team practice is scheduled for April 1. The activities, their immediate predecessors, and the activity time estimates (in weeks) are listed in the following table. Time (Weeks) Activity Description ImmediatePredecessor Optimistic Most Probable Pessimistic A Meet with board 1 1 2 B Hire coaches A 4 6 8 C Conduct fundraiser A 2 4 6 D Announce program B, C 1 2 3 E Meet with coaches B 2 3 4 F Order team equipment A 1 2 3 G Register athletes D 1 2 3 H Reserve buses for meets G 1 2 3 I Plan first practice E, H, F 1 1 1 (a) Draw a project network. A project network with 11 activities and 13 directed arcs is shown. Activity Start is connected to activity A. Activity A…arrow_forwardEdwards and Bell market a single line of home computers, dubbed the XL-98. The master budget forthe coming year contained the following items: sales revenue, $400,000; variable costs, $250,000;fixed costs, $100,000. Actual results for the year were as follows: sales revenue, $350,000; variable costs, $225,000; fixed costs, $95,000. The flexible-budget operating income for the year was$35,000. (a) What is the total master (static) budget variance in operating profit for the period? (b)What portion of the total master (static) budget variance is attributable to actual sales volume beingdifferent from planned sales volume? (c) What portion of the total variance is due to a combinationof selling price and costs (variable cost per unit and total fixed costs) being different from budgetedamounts? (Round all answers to the nearest whole dollar.)arrow_forward
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