In: Finance
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.
(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%