Reference no: EM133642772

Question

a) Draw the network b) What is the probability that the project duration exceeds 16 weeks? The cost of developing this project is equal $3000. On the other hand, the revenue you can make out of this project depends on the time you (as project manager) promise to complete it. More specifically, you know that the revenues are given by Revenues = 30000-1000×(Project duration (in weeks) that you quote) However, if the duration of the project ends up being larger than the duration that you quote then there is a fixed penalty of $8000 that you will need to pay. For example, if you quote a duration of 12 weeks and the project takes 12 or less weeks then your net profits are $18000 on revenues minus $3000 on fixed costs (that is, $15000). However, if the duration exceeds 12 weeks then your profits are $18000 on revenues minus $3000 on fixed costs minus $8000 on penalty ($7000). c) What is the optimal duration that you should quote?