Question: Bill Fredlund president of Lincoln Log Construction is considering placing

Bill Fredlund, president of Lincoln Log Construction, is considering placing a bid on a building project. Bill has determined that five tasks would need to be performed to carry out the project. Using the PERT three-estimate approach, Bill has obtained the estimates in the next table for how long these tasks will take. Also shown are the precedence relationships for these tasks.
There is a penalty of $500,000 if the project is not completed in 11 weeks. Therefore, Bill is very interested in how likely it is that his company could finish the project in time.
(a) Construct the project network for this project.
(b) Find the estimate of the mean and variance of the duration of each activity.
(c) Find the mean critical path.
(d) Find the approximate probability of completing the project within 11 weeks.
(e) Bill has concluded that the bid he would need to make to have a realistic chance of winning the contract would earn Lincoln Log Construction a profit of about $250,000 if the project is completed within 11 weeks. However, because of the penalty for missing this deadline, his company would lose about $250,000 if the project takes more than 11 weeks. Therefore, he wants to place the bid only if he has at least a 50 percent chance of meeting the deadline. How would you advise him?

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  • CreatedSeptember 22, 2015
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