HOMEWORK 2–ANDERSON ASSOCIATES

HOMEWORK 2 – ANDERSON ASSOCIATES

As he studied the latest estimates for the tire shop building at Rancho Shopping Center, Mr. Montero realized that some of the activities would have to be rushed in order to complete the job in 54 days. To provide more useful information on the effects of rushing some of the construction steps, Mr. Montero estimated the extra cost of reducing the normal time required for each step by one of more days, as shown in Exhibit 2. These costs would increase the cost of the tire shop over what might be called the cost under “optimal conditions” (i.e. the cost incurred if each step could be performed at normal pace without undue rushing, overtime, etc.)

1. Given the information, if cost is no object, what is the minimum number of days it would take to complete the store (i.e., what is the shortest possible duration of the project)?

1. What is the least cost way of finishing the project in 54 days to be ready for the opening of the shopping center?

1. Suppose that if the tire store opens late, the penalty cost is estimated to be $1,000 per day. What day number should the tire store be completed? Why? What will be the total additional costs incurred for opening the store early, including any penalty costs?

Exhibit 2: Task crashing possibilities and costs (options for each task are mutually exclusive – in other words either you can reduce Specs by 2 days for $50 or you can reduce Specs by 3 days for $600, but not both)