Question 1: (10 marks)

The concept of risk and risk analysis has a long history. Give the three importance of
risk and discuss each one of them.
Question 2: (30 marks)
ABC Glocery and Supermarket Outlets plans to automate its warehouse by installing
a computer-controlled order-packing system and a conveyor system for moving
goods from storage to the warehouse shipping area.
2.1 What is risk assessment and its methodologies? Draw a flowchart for risk-based
lifecycle management for this project.
2.2 Prepare a risk breakdown structure associated with this project from the point of
view of the project management company that represents the owner of ABC
Grocery and Supermarket Outlets.
2.3 Use the failure mode and effect analysis (FMEA) and fault-tree analysis (FTA)
methods for analyzing and assessing risks encounted by the contractor company
contructing the automated warehouse project. The undesirable event in these
models is that the project will not be finished on time.
Question 3: (30 marks)
3.1 Provide example performance and functional requirements for an office building.
Develop portions of a work breakdown structure fo an office building.
3.2 A textile company is considering three options for managing its sale operation in
the textile business: D1-local or national production facilities, D2-international or
foreign production facilities, D3-combination of local and internationally production
facilities. The cost of the decision depends on future demand on its textile products.
the annual costs for each decision alternative for three levels of demand (in
thousands of dollars) are as follows:
Decision alternatives
Future demand state
High demand (S1)
Medium demand (S2)
Low demand (S3)
D1
500
550
D2
450
300
D3
350
400

450
800
650

The company estimated the probability of S2 to be three times the probability of S3,
and the probability of S1 is equal to the probability of S2.
a) Construct a decision tree for this decision situation showing the probability values
and cost values in a graphical representation.
b) What is the recommended strategy using the expected value approach?