Three Critical Path Activities from the Same Critical Path Are

question 69

Essay

Three critical path activities from the same critical path are candidates for crashing on a CPM network. Activity details are in the table below.
(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) Assuming no other paths become critical, 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?

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Definitions:

Total Revenue

The total income earned by a firm from selling its products or services, calculated as the quantity sold multiplied by the selling price.

Marginal Revenue

The additional income earned by selling one more unit of a product or service.

Minimum AVC

The lowest point on the Average Variable Cost curve, indicating the most efficient scale of production where variable costs per unit are minimized.

Economic Losses

Refers to the situation where total costs exceed total revenues, leading to a negative net income for a business.