Subject: Industrial Engineering (Mechanical Engineering)

Topic: Project Management, Engineering Economy, and Inventory Management - 3 questions related to these 3 topics. Please answer question 2 & 5

QUESTION 1 (20 MARKS) A. a m Tasks to build one cantilever bridge are divided into eight (8) activities as shown in Table 1.1. It also provides three (3) time estimates (optimistic (a), most likely (m) and pessimistic (b)) for each activity and their precedence. Table 1.1: Activities and timings for building cantilever bridge Duration (months) Immediate Maximum Crashing cost, Activity b Predecessor crashing time RM per month 1 3 5 1 2000 B 2 5 8 1 5000 4 7 10 2 1000 D 3 4 5 A, B 1 4500 E 1 2 3 C.D 0 F 6 8 DE 1 3000 G 5 6 7 E, F 2 1000 H 2 3 4 F, G 0 10 i. Construct a network diagram based on Activity-on-Node (AON) for the bridge and determine the minimum time to complete the whole project. Highlight critical path(s) in the drawn network diagram. (8 marks) ii. Calculate the probability that the project will be completed in 17 months or less. Appendix A provides information on Z values and their probabilities. (2 marks) iii. If the project should be shortened for four (4) months, determine which activities should be crashed and the amount of additional cost incurred. (4 marks) QUESTION 2 (20 MARKS) A. Figure 2.1 shows a cash flow diagram for an engineering project. The project has an initial investment of RM 50,000 and expenditure of RM 5000 every six months for 5 years. Az= RM?/3 months 0 3 6 60 months Ai = RM 5000/6 months i = 10% per year compounded quarterly P= RM 50,000 Figure 2.1: Cash flow of an engineering project You have been asked to determine the minimum income required for every 3 months to cover all the project costs. (3 marks) B. Badang Builder Sdn. Bhd. has won a tender to build a 10km toll road. Initial cost of the project is RM 4,000,000. The main contractor will pay RM 20,000 for the operational cost every 3 months to the subcontractor for 2 years. The road needs to carry out resurfacing works every 5 years with a cost of RM 400,000. It is expected that the road can be completed at the end of year 2. After completion, annual operational cost for the road is about RM 100,000 forever. The company wishes to estimate the minimum annual income from the toll collection for a period of 15 years. The company asks you to do this analysis. Assume that the growth rate is 10% per year compounded annually. (7 marks) QUESTION 5 (20 MARKS) A. Ayu Katek Sdn. Bhd. is a raw material distributor to the cosmetic companies operated in Kuala Lumpur. SQL3PH is among the highest demand raw materials with average monthly sales of 5000 kg. Purchasing cost of this material is RM100/kg and holding cost is estimated 5% of the purchasing cost. The current practice of the company is by ordering 500kg in every purchase with an average ordering cost of RM30 per order. It takes 3 days for the order to arrive. The company works 25 days a month. i. Determine the inventory total cost with the current ordering practice. (2 marks) ii. Analyze the given information and subsequently propose an economic ordering quantity for this material. Calculate also the percentage of inventory cost saving with the new ordering quantity. (4 marks) iii. Determine the minimum inventory level before making a new order. (1 mark) iv. Sketch two inventory cycles for this case and label the maximum quantity, lead time, cycle time between order and usage rate