reducing project cost

8/7/2019 Reducing project cost

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Reducing project cost

Cost duration trade off

Step1: Original project duration, 3+11+5+6=25 days

Critical path: A-D-F-G/ 25 days/

Step2: first, we shorten 1 day to- 24days

A 20 seems to be having the minimum crash cost slope

D 25

F 30

Hence, we shorten this activity first

Shorten to 24days

A (3days) 2days

2days of duration seems to be the

crash time of activity A.

Hence, 2X. (Refer table)


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Step3: Shorten to 23 days

The 2nd

activity in the critical path, D. From 11days 10 days.

Step 4: Shorten to 22 days

Activity F

Step 5: Shorten to 21 days

Now lets see activity G. Since the maximum crash time is zero. Hence, we cannot TOUCH this

activity. Hence, we shall shorten the activity having the maximum gap between the maximum

crash times.

D from 11 days to 10 days.

Crash time of act D is 7.

Activity F from 5 days to 4 days

Which is the crash time, hence it

will be 4X

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Hence,

2+9+4+6= 21 days

Now, we have to change the other path to the duration of 21 days.

E: from 8 days to 7 days.

C: from 10 days to 9 days. 9X (match the crash time)

Minimum total co

is 775.


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Exercise

Find the optimum cost for Project A. Given indirect cost for this project is

RM70/day

AON:

Indirect cost/ rm70 per day/

Critical path: total duration of 45 days.

b (10) d (4)

f (5) i (10)

h (10)

a (6)

C (14) e (8) g (12)

j (5)

a (6)

C (14) e (8) g (12)

j (5)


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Original cost: 5200 (45days)

Try decrease the duration to days 40 days?!

Act A, original 6 days, - 5 days

Act changed is A

Activity Slope(rm) Maximum crash time

a 100 2

b 50 2

c 50 2

d 50 1

e 80 3

f 100 1

g 50 3

h 50 2

i 75 2

j 70 2

44days

First, we select the cheapest slope to shorten. It will be activity c with 50 slopes

Hence 14 days to 13 days, cost changed. 5200+50= rm5250.

a (5)

C (13) e (8) g (12)

j (5)


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43 days

Anothe

cheapest activity would be activity g. slope=50

12 days to 11 days cost changed, 5250+50=5300

42 days

Then wechange activity J

5 days to 4 days. Cost changed, 5300+70=5370

41 days

Change act e.

8 days to 7 days. Cost changed, 5370+80=5450

a (5)

C (13

e (8

g (11

j (5

a (5)

C (13

e (8

g (11

j (4

a (5)

C (13

e (7

g (11

j (4


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At last, wechanged activity a and any othes path. To 40 days.

Changed a / 100

Changed 5450+100=5550

Days Direct cost In Direct cost Total cost

45 5200 3150 835044 5250 3080 833043 5300 3010 831042 5370 2940 831041 5450 2870 832040 5550 2800 8350

b (10

d (4

f (5 i (10

h (10

a (4

C (13 e (7 g (11

j (4

reducing project cost

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