Practice Problems

Problem $1$

The air conditioning unit of the Home State Insurance Company$$s new office

wing is not functioning. The compressor and the fan are out because the system

was improperly wired. After much discussion, the general contractor has agreed

to replace the whole system. The agreement specifies penalty costs of $$300$ for

every day over $15$ that the replacement requires. In addition, the contractor

estimates that it will cost $$50$ in indirect project costs each day just to administer

the project. What is the most economical length of time to complete the repairs?

How does the contractor achieve this? How much money is saved with the most

economical plan compared to the $$normal duration$$ plan? Summarized data for

the project is given below.