Question Four

You are in the planning department of the T construction Co. LTD, which has contracted to undertake
fairly extensive motorway repair works in the West Region. Due to problems of weather at that time of
the year, and as the police have asked for co-operation in stopping work from time to time if undue traffic
occurs, there is some doubt as to the precision of estimates for completing each phase of the work.
However, Co, are happy that the following network data is applicable to the job. To avoid candidates
being confused by technicalities the activities are coded A to G as follows:

Time estimates (weeks)

Activity Optimistic Most likely Pessimistic Preceeding

A 4 7 13 -

B 3 6 9 -

C 4 4 12 A

D 2 3 10 B

E 1 3 11 B

F 4 6 8 C,D

G 1 5 15 E

(a) Construct the relevant network, (b) Determine the estimate length of the critical path, (c) Determine
the standard deviation of the critical path.

T company has to undertake a second project which could use equipment released from the above project
if it fishes early, or it could hire up to 2 excavators at a cost of 4000 MU each. For each excavator not
hired when one was needed a financial penalty of 14000 MU would be incurred. The situation is
summarized in the pay-off table. The decision on hiring must be taken now before the first project is
started.

Time table to complete first project

Under 16 weeks 17-18 weeks 19 weeks and

over

Extra costs incurred in MU

Number of 0 0 14000 28000

excavations hired
1 4000 4000 18000

2 8000 8000 8000

(d) Derive the probabilities of completing the first project in the given time periods.
 (e) Recommend to the company how many excavators should be hired using the criterion of the lowest
expected cost.

Solution

To determine the critical path, we start by converting given times (optimistic, most likely and pessimistic)
intoexpected times for each activity

i)

Activity Optimistic Most likely Pessimistic Expected time

a m b (a+4m+b)/6

A 4 7 13 7.5

B 3 6 9 6

C 2 4 6 4

D 2 3 10 4

E 1 3 11 4

F 4 6 8 6

G 1 5 15 6

(i) The relevant network using the computed expected time

2 C
4 F
4
7.5 7.5
11.5 11.5 6
1
6

0 D 17.5 17.5
0 4
G
B
6 E 5
3 6
10 11.5
7.5 4
6
sThe critical path is ACF with an expected time of 17.5 weeks

The variance of project time is given be adding the variances of activities that lie on the critical path. The
variance of individual jobs is given by:

σ 2=(b-a)2

Variance (A)=(13-4)/6)2 =81/36

Variance (C)=(6-2)/6)2 =16/36

Variance (f)=(8-4)/6)2=16/36

Variance of project time (σ c2 ) = ( 81+16+16) /36 = 113/36

The standard deviation

Qc = √113 = 1.772

36

(b) (i) The probability of meeting a scheduled date (ts) is got by using the Z-

Variable (or distribution) given by:

( ts−tc )
Z c= ≈ N (0 ,Q 2)
Qc

For ts = under 16 weeks, tec = 17.5 and Qc =1.772

Pr (Z ≤(16−17.5)/1.772)= pr (Z ≤−0.85)

¿ 0.5−pr (0 ≤ Z ≤ 0.85)

¿ 0.5−0.3023

¿ 0.1977

For ts =17 to 18 weks,

Pr (17−17.5)71.772 ¿ ≤ Z ≤(18−17.5)/1.772¿= pr (−0 . 28 ≤ Z ≤ 0.28)

¿ 2 pr (0 ≤ Z ≤ 0.28)

¿ 2(0.1103 )
¿ 0.2206

Forts ts= 19 weeks and over, tec ¿ 17.5∧Qc=1.772

pr ¿

¿ 0.5−pr (≤ z ≤ 0.85)

¿ 0.5−0.3023

0.1977

i) Using the criterion of lowest expected cost, we can use the probability to compute the extra
cost of excavators as follows:

For Hiring 0 Extracavator (that is no excavator is hired)

Extra cost = 0(0.1977) + 14000 ( 0.2206) + 28000 (0.1977) = 8624 MU

For hiring 1 Extracavator

Extra cost = 4000 (0.1977) + 4000 ( 0.2206) +18000 ( 0.1977) =5232 MU

For hiring 2 Extracavators

Extra cost=8000( 0.1977)+ 8000(0.2206)+8000 (0.1977)=4928 MU

Hence, 2 Extracavators should be hired becasuse by hiring two extracavators company incurs the lowest
extra cost.