Question

Problem 9-17

The Porsche Shop, founded in 1985 by Dale Jensen, specializes in the restoration of vintage Porsche automobiles. One of Jensen's regular customers asked him to prepare an estimate for the restoration of a 1964 model 356SC Porsche. To estimate the time and cost to perform such a restoration, Jensen broke the restoration process into four separate activities: disassembly and initial preparation work (A), body restoration (B), engine restoration (C), and final assembly (D). Once activity A has been completed, activities B and C can be performed independently of each other; however, activity D can be started only if both activities B and C have been completed. Based on his inspection of the car, Jensen believes that the following time estimates (in days) are applicable:

Activity		Optimistic		Most Probable		Pessimistic
A		3		4		8
B		5		8		11
C		2		4		6
D		4		5		12

Jensen estimates that the parts needed to restore the body will cost $3000 and that the parts needed to restore the engine will cost $5000. His current labor costs are $400 a day.

1. (i)

2. What is the expected project completion time?
   
   Critical Path:  
   
   If required, round your answer to one decimal place.
   
   Expected time =  days
3. Jensen's business philosophy is based on making decisions using a best- and worst-case scenario. Develop cost estimates for completing the restoration based on both a best- and worst-case analysis. Assume that the total restoration cost is the sum of the labor cost plus the material cost.
   
   If required, round non-monetary answers to the nearest whole number. If required, round monetary answers to the nearest dollar.
   
   Best Cost (Optimistic Times) = days
   
   Total Cost = $  
   
   Worst Cost (Pessimistic Times) =  days
   
   Total Cost = $  
4. If Jensen obtains the job with a bid that is based on the costs associated with an expected completion time, what is the probability that he will lose money on the job?
   
   If required, round non-monetary answer to two decimal places. If required, round monetary answer to the nearest dollar.
   
   Bid Cost = $  
   
   probability time and cost will exceed the expected time and cost (If required, round your answer to two decimal places).
5. If Jensen obtains the job based on a bid of $16,800, what is the probability that he will lose money on the job?
   
   Note: Use Appendix B to identify the areas for the standard normal distribution. If required, round your answer to four decimal places.
   
   The probability of a loss is

Answer 1

Tural cost Will be in optimistic scenario - 3000 + 5ooo + 12 (400) = $ 12800 For pessimistic scenario - 03 Project Completion time will be 8+11+12 = 131 days Total cost in pessimistic scenario lid = 3000+ 5000 +316400) = 1320400 to on

D OSO The probablity of completion of work at Expected time will be always 10.50 in PERR Metwork So the probullity of not completing the job and losing money will also be o.so Bid Cost = 3000t sooot 18.5 (400) = $15,400 e It Jensen bid $16,800 (SDI-0002 The No. of days he is Expecting are 16,800= 5000 + 3000 t 4oo (No. of days) so mo. of days = 22

Calealating Prabublou cef the proyect in 22 days completing Before that we need to calculate Oc6q էր | 0 0 0 | 1. 2- (1 ՐՐՐԸ ( 4 4 4 6 on critical 6 qկ + (-5 0 +{: ** < 1-Կ Շ-- {c^ - 1-861) 2 = X- 1 Final Anwar | = a 1 -1 %• 2 1. {{ro | |: 6 \ fo:030]] PCze | % o) = 0-1 679 ) Probablity of losing Muey = 1-8.9899
Short Summary of answers (Detailed explanation is in the images above):

Expected project completion time is 18.5 days with critical path A-B-D

In Optimistic scenario the project competion time will be 12 days and the cost $12,800

In Pessimistic scenario the project completion time will be 31 days and cost will be $20,400

The probability of loss at expected time will be 0.50 with bid of $15,400

If Jensen bid $16,800, the probability he will make loss is 0.0301  

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