HW1 - Fall 2009 BMGT 385 Professor Elmaghraby HW1 This...

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Unformatted text preview: Fall 2009 BMGT 385 Professor Elmaghraby HW1 This homework is due Sept. 23 before class starts. Please staple your answers, write neatly and clearly and put your name on the top of each page of your HW. Please be certain to show all of your supporting work for each problem in order to receive full credit for each problem. 1. Cash Flow problem (a) A hardware vendor manufactures $300 million worth of PCs per year. On average, the company has $45 million in accounts receivable, how much time elapses between invoicing and payment in terms of days if each year is 360 days? (5 points) (b) Moreover, assuming that there is an average annual opportunity percentage cost of 10% (i.e., if you are promised by one of your buyer to receive 1000$ in one year from now, you could have made the average 1100$ in a year (by investing somewhere else) if you had received that 1000 $ today. Hint: think of exactly annual holding cost rate of inventory), what would be on average the opportunity cost in year for this vendor for 1 $ worth of account receivable? (5 points) 2. Problem 4 [Apparel retailing] in chapter 2 of the Cachon and Terwiesch Part (a): 5 points. Part (b): 5 points 3. A project has been defined to contain the following list of activities, along with their required times for completion A c tiv ity D e s ig n a tio n Im m e d ia te P re d e c e s s o rs T im e s (w e e k s ) Design Build prototype Evaluate equipment Test prototype Write equipment report Write methods report Write final report (a) A B C D E F G -A A B C,D C,D E,F 21 5 7 2 5 8 2 Draw the critical path diagram (complete network) (3 points). (b) Find all critical paths and determine how many weeks it will take to complete the project? (4 points). (c) How much slack does the activity E (write equipment report) have? (3 points). Fall 2009 Professor Elmaghraby 4. Here is the table of normal and crash times and costs for the following CPM which takes 25 weeks to complete. The goal is to complete the project in 23 weeks. B A ( C D F G E A c tiv ity N o rm a l T im e C ra sh T im e N o rm a l C o st $ C ra sh C o st $ A B C D E F G 7 3 4 5 4 4 5 6 2 3 4 3 3 4 9000 5000 7100 3000 2000 4000 5000 10200 7000 8000 4500 3000 7000 8000 (a) Suppose we wish to reduce the length of the project by 2 weeks (from 25 down to 23 weeks). Which activity(-ies) should be shortened, and by how much, so as to reduce our duration to 23 weeks in the least cost way? (4 points) (b) What is the (minimum) incremental cost of reducing the projects duration from 25 to 23 weeks? What is the (minimum) total cost of finishing the project in 23 weeks? (4 points) (b) What is the critical path(s) when the project duration is 23 weeks? (2 points) ...
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