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

---

Definitions:

Marginal Cost Curve

A graph that shows the cost of producing one more unit of a good or service at any given level of production.

Average Total Cost (ATC)

The total cost of production (fixed and variable costs combined) divided by the number of units produced, indicating the average expense per unit of output.

Total Cost

The aggregate cost of all resources used in the production of a good or service, including both fixed and variable costs.

Output

The total quantity of goods or services produced by a firm, industry, or economy within a certain period.