The Porsche Shop, founded in 1985 by Dale Jensen, specializes in the restoration of vin- tage Porsche automobiles. One of Jensen's regular customers asked him to prepare an estimate for the restoration of a 1964 model 356SC Porsche. To estimate the time and cost to perform such a restoration, Jensen broke the restoration process into four separate ac- tivities: disassembly and initial preparation work (A), body restoration (B), engine restora- tion (C), and final assembly (D). Once activity A has been completed, activities B and C can be performed independently of each other; however, activity D can be started only if both activities B and C have been completed. Based on his inspection of the car, Jensen believes that the following time estimates (in days) are applicable:
|
Activity
A
|
Optimistic
3
|
Most Probable
4
|
Pessimistic
8
|
|
B
|
5
|
8
|
11
|
|
C
|
2
|
4
|
6
|
|
D
|
4
|
5
|
12
|
Jensen estimates that the parts needed to restore the body will cost $3000 and that the parts needed to restore the engine will cost $5000. His current labor costs are $400 a day.
a. Develop a project network.
b. What is the expected project completion time?
c. Jensen's business philosophy is based on making decisions using a best- and worst- case scenario. Develop cost estimates for completing the restoration based on both a best- and worst-case analysis. Assume that the total restoration cost is the sum of the labor cost plus the material cost.
d. If Jensen obtains the job with a bid that is based on the costs associated with an ex- pected completion time, what is the probability that he will lose money on the job?
e. If Jensen obtains the job based on a bid of $16,800, what is the probability that he will lose money on the job?