When Using the Beta Distribution for Estimating Activity Times

question 91

Multiple Choice

When using the beta distribution for estimating activity times:

• A) an advantage is that the mode of the distribution is always equidistant from the end points of the distribution.
• B) the most likely time estimate can be positioned anywhere between the optimistic and pessimistic time estimates.
• C) we assume that the standard deviation is one-third the range between the optimistic and pessimistic time estimates.
• D) the most likely time estimate becomes the mean of the distribution.

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Definitions:

Cash Operating Expenses

Expenses incurred during the normal operation of a business that affect its cash position, such as rent, utilities, and payroll, excluding non-cash expenses like depreciation.

Working Capital

The difference between a company's current assets and its current liabilities, indicating the liquidity and operational efficiency of the business.

Straight-Line Depreciation

A technique for breaking down the financial responsibility of a physical asset over its effective life in consistent yearly portions.

Working Capital

The variance between a firm's existing assets and liabilities, showcasing the immediate financial wellbeing and efficiency in operations of the company.