Question

3. (25 points) When an accounting firm audits a corporation, the first phase of the audit involves obtaining "knowledge of the business." This phase of the audit requires the activities in the following table: Activity Description Duration (Days) Immediate Predecessors 4 Determining terms of engagement Appraisal of auditability risk and materiality 14 Identification of types of transactions and possible errors Systems description Verification of systems description Evaluation of internal controls B, E Design of audit approach (a) Draw the project network using an AOA (activity on arc) representation. (5 points) (b) Use POM-QM to determine the critical path for the network. (6 points) (c) Use Excel Add-In to determine the critical path for the network. (6 points) (d) Assume that the project must be completed in 30 days. The duration of each activity can be reduced by incurring the costs shown in a table given below. Use POM-QM to obtain a solution. (8 points) Maximum Possible Reduction in ActivityCost per Day of Reducing Duration Duration Activity (Days) of Activity S) 110 90 70 80 40 35 60

Answer 1

Activity	Immediate Predecessors	Duration
A	-	4
B	A	6
C	A	14
D	C	8
E	D	4
F	B,E	8
G	F	9

Edge and it's preceded and succeeded node

Edge	Node1 → Node2
A	1→2
C	2→3
B	2→5
D	3→4
E	4→5
F	5→6
G	6→7

C(143D) D(8 A 4 E(4) B(6) B(6) B(6) F(8) 6 G9)

The critical path of the project is: 1-2-3-4-5-6-7 and critical activities are A, C, D, E, F, G
The total project time is 47

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