A Company Is Faced with a Project of Implementing a New

question 39

Essay

A company is faced with a project of implementing a new ERP system.The information on activity precedence,time,and cost is given below (time in weeks).
$$\begin{array} { | l | l | r | r | r | r | r | } \hline \text { Activity } & \text { Predecessor(s) } & \begin{array} { l } \text { Standard } \\\text { Time }\end{array} & \begin{array} { l } \text { Crash } \\\text { Time }\end{array} & \begin{array} { l } \text { Standard } \\\text { Cost }\end{array} & \begin{array} { l } \text { Crash } \\\text { Cost }\end{array} & \begin{array} { l } \text { Crash } \\\text { Cost/Wk }\end{array} \\\hline \text { A } & \text { none } & 9 & 7 & \$ 700 & \$ 1100 & \$ 200 \\\hline \text { B } & \text { A } & 7 & 6 & \$ 600 & \$ 750 & \$ 150 \\\hline \text { C } & \text { A } & 5 & 3 & \$ 500 & \$ 1000 & \$ 250 \\\hline \text { D } & \text { B } & 4 & 2 & \$ 550 & \$ 800 & \$ 125 \\\hline \text { E } & \text { C } & 6 & 5 & \$ 800 & \$ 900 & \$ 50 \\\hline \text { F } & \text { D,E } & 5 & 3 & \$ 700 & \$ 1000 & \$ 150 \\\hline \text { G } & \text { D } & 8 & 6 & \$ 1000 & \$ 1200 & \$ 100 \\\hline\end{array}$$
The company would like to determine which activities to crash and by how much in order to
complete the ERP implementation in 24 weeks.Using linear programming and Excel Solver,find
the best solution

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Definitions:

Comparative Costs

The analysis or comparison of the costs of different choices or actions to inform decision-making processes.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific products or projects based on the activities that drive those costs.

Overhead Allocation

The process of distributing overhead costs, such as rent and utilities, to different departments or products based on a certain criteria or formula.

Cost-Based Pricing

A pricing strategy where the selling price of a product or service is determined by adding a markup to its total cost of production or acquisition.