Three Critical Path Activities Are Candidates for Crashing on a CPM

question 10

Essay

Three critical path activities are candidates for crashing on a CPM network. Activity details are in the table below.
$$\begin{array} { | c | c | c | c | c | } \hline \text { Activity } & \text { Normal Time } & \text { Normal Cost } & \begin{array} { c } \text { Crash } \\\text { Duration }\end{array} & \text { Crash Cost } \\\hline \text { A } & 9 \text { days } & \$ 8,000 & 7 \text { days } & \$ 12,000 \\\hline \text { B } & 5 \text { days } & \$ 2,000 & 3 \text { days } & \$ 10,000 \\\hline \text { C } & 12 \text { days } & \$ 9,000 & 11 \text { days } & \$ 12,000 \\\hline\end{array}$$ a. What is the crash cost per unit time for activity A?
b. What is the crash cost per unit time for activity B?
c. Which activity should be crashed first to cut one day from the project's duration; how much is added to project cost?
d. Which activity should be the next activity crashed to cut a second day from the project's duration; how much is added to project cost?
e. Assuming no other paths become critical, how much can this project be shortened at what total added cost?

---

Definitions:

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs.

Monopolistic Competition

A market structure characterized by many firms selling similar but not identical products, with each having some control over its own prices.

Price Makers

Entities in a market that have the power to set prices for goods or services because they hold significant control over the market or the product.

Oligopoly

A market structure in which a small number of firms dominate the market, leading to limited competition and possibly higher prices for consumers.