Question

In: Finance

Problem 12-09 (Algorithmic) A project has four activities (A, B, C, and D) that must be...

Problem 12-09 (Algorithmic)

A project has four activities (A, B, C, and D) that must be performed sequentially. The probability distributions for the time required to complete each of the activities are as follows:


Activity
Activity Time
(weeks)

Probability
A 3 0.29
4 0.38
5 0.29
6 0.04
B 7 0.22
9 0.53
11 0.25
C 9 0.05
11 0.24
13 0.36
15 0.19
17 0.16
D 10 0.59
12 0.41
  1. Provide the base-case, worst-case, and best-case calculations for the time to complete the project.
    Activity Base case Worst case Best case
    A _____weeks _____weeks _____weeks
    B weeks weeks weeks
    C weeks weeks weeks
    D weeks weeks weeks
    Total weeks weeks weeks
  2. Use the random numbers 0.7584, 0.7279, 0.4741 and 0.9526 to simulate the completion time of the project in weeks.
    Activity Random Number Completion Time
    A 0.7584 ____weeks
    B 0.7279 weeks
    C 0.4741 weeks
    D 0.9526 weeks
    Total weeks

Solutions

Expert Solution

T p A=T*p
ACTIVITY Activity Time (weeks) Probability Activity Time*Probability
A 3 0.29 0.87
4 0.38 1.52
5 0.29 1.45
6 0.04 0.24
SUM 4.08
Base Case Time for Activity A 4.08
B 7 0.22 1.54
9 0.53 4.77
11 0.25 2.75
SUM 9.06
Base Case Time for Activity B 9.06
C 9 0.05 0.45
11 0.24 2.64
13 0.36 4.68
15 0.19 2.85
17 0.16 2.72
SUM 13.34
Base Case Time for Activity C 13.34
D 10 0.59 5.9
12 0.41 4.92
SUM 10.82
Base Case Time for Activity D 10.82
Time in Weeks
Activity Base case Worst case Best case
A 4.08 6 3
B 9.06 11 7
C 13.34 17 9
D 10.82 12 10
Total 37.30 46.00 29.00
SIMULATION
ACTIVITY A
Mapping of Random Number
Activity Time Probability Cumulative Probability Mapped Random Number
3 0.29 0.29 00-28
4 0.38 0.67 29-66
5 0.29 0.96 67-95
6 0.04 1 96-99
Activity Random Number First two Digits Activity Time Mapped Numbers
A 0.7584 75 5 67-95
ACTIVITY B
Mapping of Random Number
Activity Time Probability Cumulative Probability Mapped Random Number
7 0.22 0.22 00-21
9 0.53 0.75 22-74
11 0.25 1 75-99
Activity Random Number First two Digits Activity Time Mapped Numbers
B 0.7279 72 9 22-74
ACTIVITY C
Mapping of Random Number
Activity Time Probability Cumulative Probability Mapped Random Number
9 0.05 0.05 00-04
11 0.24 0.29 .05-28
13 0.36 0.65 29-64
15 0.19 0.84 65-83
17 0.16 1 84-99
Activity Random Number First two Digits Activity Time Mapped Numbers
C 0.4741 47 13 29-64

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