1. What has a larger impact on Palmstar’s profits, delaying the 2000 c ’ s introduction by 3 months or increasing the project ’ s budget by 30 percent?

2. Are there other factors you would consider in addition to profit?

3. What should Palmstar do? Why?

4. How generalizable do you think the results of your analysis in this particular case are to other situations?

MINI CASE 

Palmstar Enterprises, a leading manufacturer of handheld computers, is currently in the process of developing its next generation device, the model 2000 c. A key feature of the 2000 c is its color display. According to the original project schedule, the 2000 c is to be released 1 month from now. Because the amount of time required to convert the existing software to capitalize on the color display was significantly underestimated, the project has fallen behind schedule. The project manager estimates that without additional resources, the development project will be 3 months late. He has also estimated that increasing the project’s budget of $3 million by 30 percent would permit the project to be completed on schedule. The added budget would be used primarily to staff the project with additional software engineers.