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Quiz # 2

1. Consider the following activities of a project:

Activity 1-2 1-3 1-4 1-5 2-6 3-6 3-7 4-7 5-7 7-6 6-8 7-8
Normal time,
Weeks 2 4 6 3 4 2 5 4 3 6 4 7

The company loses P1,000 for every week the project lasts beyond 17 weeks. For each of
the following proposals taken independently, discuss why (or why not) they are good ideas:

Activity 4-7 can be reduced to 1 week by using overtime and extra labor at a total cost of
P2000.

Activity 7-6 can be reduced to 3 weeks by taking resources from Activity 7-8, thereby
increasing its expected time to 10 weeks at no additional cost.

Activity 3-7 can be reduced to 2 weeks at a total cost of P1000.

Activity 6-8 can be reduced to 1 week by taking resources from Activity 7-8, thereby
increasing its expected time to 9 weeks at no additional cost.

2. The activities involved in the production and assembly of a certain special customer order are
as follows:

Normal Time Normal Cost Crashed Time Crashed Cost


Activity (Days) (Pesos) (Days) (Pesos)
1-2 4 1,000 3 1,300
1-4 7 1,400 4 2,000
1-3 5 2,000 4 2,700
2-5 6 1,200 5 1,400
4-5 3 900 2 1,100
3-6 11 2,500 6 4,000
5-6 4 800 3 1,450
6-7 3 300 1 500

The firm will experience a penalty of P100 per day starting on the 13th day from now. The
projects indirect costs are estimated to be P300 per day. When would you recommend that
the company plan to complete the project and what would the resultant critical path be?
3. A distributor buys a product from three plants and sells the product to seven customers. The
profit he makes for each unit of product sold and the corresponding demand of each customer
are as follows:

Customer Profit per Unit (in P) Demand


North Plant South Plant West Plant
A 1.75 1.85 1.00 10
B 1.50 2.00 1.15 5
C 0.90 1.65 1.25 15
D 1.00 1.65 1.55 20
E 1.10 1.50 1.15 10
F 1.55 1.00 1.10 20
G 1.00 1.20 0.50 15
Total 95

The distributor used to have more than 3 sources of the product. But due to the depressed
economy, his sources were reduced to only 3 plants with an aggregate supply of only 90 units
as follows: 30 units from North Plant, 30 units from South Plant, and another 30 units from
West Plant. Furthermore, due to standardization, his customers are not willing to accept
partial supply from any distributor, i.e., a customer will buy his total requirement from only
one distributor. What supply network should the distributor establish which will maximize
his profits? Which customer should he give up?