Question

In: Finance

A network consists of the following list. Times are given in weeks. Activity Preceding Optimistic Probable...

A network consists of the following list. Times are given in weeks.

Activity

Preceding

Optimistic

Probable

Pessimistic

A

--

6

8

10

B

A

1

2

4

C

A

9

12

15

D

A

3

4

5

E

B

4

6

7

F

B

14

16

22

G

C, D

2

3

4

H

E, G

1

2

3

I

G

6

8

9

J

H, I

4

6

8

K

F, H, J

1

2

5

a. Draw the network diagram.

b. Calculate the expected duration and variance of each activity.

c. Calculate the expected duration and variance of the critical path

d. Calculate the probability that the project will be completed in less than 42 weeks.

Solutions

Expert Solution

(a) Network Diagram -

(b) Expected Duration of each activity = ( Pessimistic Duration + 4*Probable + Optimistic Duration ) / 6

Variance of Each activity = σ2 = { (Pessimistic Duration - Optimistic Duration) / 6 }2

Standard Deviation of each activity = √σ2 = (Pessimistic Duration - Optimistic Duration) / 6

Activity Predecessor Optimistic Probable Pessimistic Expected Variance Std Dev
A - 6 8 10 8.00 0.444 0.667
B A 1 2 4 2.17 0.250 0.500
C A 9 12 15 12.00 1.000 1.000
D A 3 4 5 4.00 0.111 0.333
E B 4 6 7 5.83 0.250 0.500
F B 14 16 22 16.67 1.778 1.333
G C, D 2 3 4 3.00 0.111 0.333
H E, G 1 2 3 2.00 0.111 0.333
I G 6 8 9 7.83 0.250 0.500
J H, I 4 6 8 6.00 0.444 0.667
K F, H, J 1 2 5 2.33 0.444 0.667

(c) Possible Network Path and their Duration are -

Path Duration
ABFK 29.17
ABEHK 20.33
ABEHJK 26.33
ACGHK 27.33
ACGHJK 33.33
ACGIJK 39.17
ADGHK 19.33
ADGHJK 25.33
ADGIJK 31.17

The critical path is the path with longest duration = ACGIJK with expected duration of 39.17

Variance of critical path ACGIJK = 0.444 + 1.000 + 0.111 + 0.250 + 0.444 + 0.444 = 2.693

(d)

project duration is 39.17 time units

Standard deviation of critical path = √variance = √2.693 = 1.641

So, µ = 39.17, σ = 1.64

Probability that the project will be completed in less than 42 weeks = P(z)

z = ( x - µ )/ σ = (42 - 39.17)/1.64 = 1.73

From the z table, P(z) = 0.9582

Hence probability that the project will be completed in fewer than 30 time units is 95.82%


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