X Case IV - Reducing Project Duratx - File CAUsers/Karan/Desktop/Case%201%20-%20Reducing%20Project%20Duration%20.pdf @ o 1 1 of 3 Q 0 19 Page view A Read aloud Add text V Draw Highlight Erase a Q MINI-CASE Fantasy Products Company Background The Fantasy Products Company (disguised name) is a manufacturer of high-quality small appliances intended for home use. The company's current product line includes irons, a small hand-held vacuum, and a number of kitchen appliances such as toasters, blenders, waffle irons, and coffeemakers, Fantasy Products has a strong R&D department that continually searches for ways to improve existing products as well as develops new ones. Currently, the R&D department is working on the development of a new kitchen appliance that will chill foods quickly, much as a microwave oven heats them quickly, although the technology involved is quite different. Tentatively named The Big Chill, the product will initially carry a price tag of around $125, and the target market consists of upper-income consumers. At this price, it is expected to be a very profitable item, R&D engineers now have a working prototype and are satisfied that, with the cooperation from the production and marketing people, the product can be ready in time for the all-important Christmas buying season. A target date has been set for product introduction that is 24 weeks away. Current Problem Fantasy Products marketing vice president, Vera Sloan, has recently learned from reliable sources that a competitor is also in the process of developing a similar product, which it intends to bring out at almost the same time. In addition, her source indicated that the competitor plans to sell its product, which will be smaller than The Big Chill, for $99 in the hope of appealing to more customers. With the help of several of her key people who are to be involved in marketing The Big Chill Vera has decided that in order to compete, the selling price for The Big Chill will have to be lowered to within $10 of the competitor's price. At this price level, it will still be profitable, although not nearly as profitable as originally anticipated. However, Vera is wondering whether it would be possible to expedite the product introduction process in order to beat the competition to the market. If possible, she would like to get a six-week jump on the competition, this would put the product introduction date only 18 weeks away. During this initial period, Fantasy Products could sell The Big Chill for $125, reducing the selling price to S109 when the competitor's product actually enters the market. Since forecasts based on market research show that sales during the first six weeks will be about 400 units per week, there is an opportunity for $25 per unit profit if the early introduction can be accomplished. In addition, there is prestige involved in being first to the market. This should help enhance The Big Chill's image during the anticipated battle for market share. Data Collection Type here to search O 2 7C A ENG 10:24 PM 2022-03-23 Case IV - Reducing Project Duratx + X @ o File C/Users/Karan/Desktop/Case%2016%20-%20Reducing%20Project%20Duration%20.pdf | O Page view | A Read aloud 1 of a VD Add lexl Draw Highlight Erase Erase Data Collection Since Fantasy Products has been through the product-introduction process a number of times, Vera has developed a list of the tasks that must be accomplished and the order in which Page 710 they must be completed. Although the duration and costs vary depending on the particular product, the busic process does not. The list of activities involved in product introduction and their precedence relationships are presented in Table 1 Q. Duration and cost estimates for the introduction of The Big Chill are presented in Table 29. Note that some of the activities can be completed on a crash basis, with an associated increase in cost. For example, activity B can be crashed from eight weeks to six weeks at an additional cost of $3,000 (i.e., $12,000 - $9,000), Assume that if B is crashed to seven weeks, the additional cost will be $1.500 (1.e., $3.000/2). Table 1 List of activities involved in product introduction and precedence relationships. Activity Description Immediate Predecessor(s) A Select and order production equipment B Receive production equipment from supplier A Install and set up production equipment B D Finalize bill of material Type here to search OR * ? 7C A) ENG 10:24 PM 2022-03-23 Case IV - Reducing Project Curat x - X File CAUsers/Karan/Desktop/Case%2016%20-%20Reducing%20Project%20Duration%20.pdf o 2 2 of Q | O Page view A Read aloud Add text V Draw Highlight Erase c Table 1 List of activities involved in product introduction and precedence relationships. Immediate Predecessor(s) Activity Description A Select and order production equipment B Receive production equipment from supplier A Install and set up production equipment B D Finalize bill of material - E Order parts D F F Receive parts E G C.F First production run Finalize marketing plan H H - I H Produce magazine ads Script for TV ads J H K Produce TV ads J L L Begin ad campaign I,K M Ship product to consumers G.L Type here to search O E ? 7C A) ENG 10:24 PM 2022-03-23 Case IV - Reducing Project Curat x + X File C/Users/Karan/Desktop/Case%201%20-%20Reducing%20Project%20Duration%20.pdf @ o 3 3 of 2 a | Page view A Read aloud Add text V Draw Highlight Erase Table 2 Duration and cost estimates for introduction of The Big Chill. Normal and Crash Cost Activity Normal Duration (weeks) Normal Cost Crash Duration (weeks) ( $ A 3 S 2.000 2 $ 4,400 B 8 9.000 6 12.000 c 4 2,000 2 7.000 D 2 1.000 1 2,000 E 2 2.000 1 3,000 F 5 0 5 0 G 6 12.000 3 24.000 4 3.500 2 8.000 I 4. 5.000 3 8.000 j 3 8.000 2 15.000 K 4 50,000 3 70.000 1 6 10,000 6 10,000 M 1 5.00 1 5.000 Type here to search O 7'CA) ENG 10:24 PM 2022-03-23 Case V Renkucing Project Duratx - X File C/Users/Karan/Desktop/Case%2016%20-%20Reducing%20Project%20Duration%20.pdf o 3 3 of 2 Q + Add text Highlight Erase 3 1 Page view 3,500 A Read aloud 2 Draw 8.[X00 H 4. 1 4 5.000 3 8.000 J 3 8.00X 2 15.00 K 4 50.000 3 70,000 L 6. 10,000 6 10.000 M 1 5.000 1 5.000 Fantasy Products needs to decide whether to bring The Big Chill to market 18 weeks from now, as Vera Sloan is recommending. As the project management specialist in the R&D department, you have been asked to answer the following questions. Questions 1. When would the project be completed using the normal durations? 2. Is it possible to complete the project in 18 weeks? What would be the associated additional cost? Which activities would need to be completed on a crash basis? 3. Is there some time frame shorter than the 18 weeks Vera has recommended that would make more sense in terms of profits? Source: Adapted from an original case by R. J. Thiereus, M. Cunningham, and M. Blackwell, Xavier University, Cincinnati, Ohio H Type here to search O 2 7C A) ENG 10:24 PM 2022-03-23