What Is the Minimum Cost Completion Time for This Project

question 96

Essay

What is the minimum cost completion time for this project if the activities have normal and crash costs as indicated and there is a $1,000 fixed cost for each day on site plus a $500 penalty for each activity that is crashed? The crash costs represent the cost of a fully expedited activity.For example,reducing activity Y from 13 days to 12 days costs an extra $100 on top of the $500 expediting cost for a total cost of $2,600.Reducing Y from 13 days to 10 days costs an extra $300 on top of the $500 expediting cost,for a total activity cost of $2,800.
$\begin{array}{|l|l|l|l|l|l|}\hline&&\text { Normal } & \text {Normal }& \text {Crash}\\ \text { Activity} & \text { Predecessor } & \text {Time } & \text { Cost } & \text { Time } & \text { Crash Cost }\\ \hline\mathrm{ Z} & & 2 & \$ 2,000 & 2 & \$ 2,000 \\\hline \mathrm{Y} & & 13 & \$ 2,000 & 10 & \$ 2,300 \\\hline \mathrm{X} & & 19 & \$ 2,000 & 15 & \$ 3,000 \\\hline \mathrm{W} & \mathrm{Z} & 18 & \$ 2,000 & 15 & \$ 3,000 \\\hline \mathrm{V} & \mathrm{X} & 10 & \$ 2,000 & 9 & \$ 3,000 \\\hline \mathrm{U} & \mathrm{Y} & 13 & \$ 2,000 & 11 & \$ 3,000 \\\hline \mathrm{T} & \mathrm{W} & 18 & \$ 2,000 & 14 & \$ 4,000 \\\hline \mathrm{S} & \mathrm{V} & 4 & \$ 2,000 & 3 & \$ 3,000 \\\hline \mathrm{R} & \mathrm{U} & 6 & \$ 2,000 & 5 & \$ 3,000 \\\hline\mathrm{Q} & \mathrm{R}, \mathrm{S} & 15 & \$ 2,000 & 13 & \$ 3,000 \\\hline \mathrm{P} & T & 13 & \$ 2,000 & 12 & \$ 3,000 \\\hline \mathrm{N} & \mathrm{P}, \mathrm{Q} & 4 & \$ 2,000 & 4 & \$ 2,000\\\hline \end{array}$

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Definitions:

Cash Offer

A proposal to buy an asset or security with a specific amount of cash, rather than through a finance or stock exchange.

Syndicate

A group of individuals or organizations combined to promote some common interest, often used in context with investment banking to refer to a group of banks that underwrite and distribute new issues of securities.

Dutch Auction Underwriting

A method of public offering in which the price of the offering is determined based on bids from investors.

Auction Underwriting

Auction underwriting involves financial institutions bidding to underwrite the issuance of securities, determining the price through competition, often used in government or corporate bond issuance.