Case The Pert Mustang Roberts Auto Sales and Service (RASAS) consists of three car dealerships that sell and service several makes of American and Japanese cars, two auto parts stores, a large body shop and car painting business, and an auto salvage yard. Vicky Roberts, owner of RASAS, went into the car business when she inherited a Ford dealership from her father. She was able to capitalize on her knowledge and experience to build her business into the diversified and successful mini-empire it is today. Her motto, “Sell ‘em today, repair ‘em tomorrow!” reflects a strategy that she refers to in private as “Get ‘em coming and going.” Roberts has always retained a soft spot in her heart for high-performance Mustangs and just acquired a 1965 Shelby Mustang GT 350 that needs a lot of restoration. She also notes the public’s growing interest in the restoration of vintage automobiles. Roberts is thinking of expanding into the vintage car restoration business and needs help in assessing the feasibility of such a move. She wants to restore her 1965 Shelby Mustang to mint condition, or as close to mint condition as possible. If she decides to go into the car restoring business, she can use the Mustang as an exhibit in sales and advertising and take it to auto shows to attract business for the new shop. Roberts believes that many people want the thrill of restoring an old car themselves, but they do not have the time to run down all the old parts. Still, others just want to own a vintage auto because it is different and many of them have plenty of money to pay someone to restore an auto for them. 1270131 - Pearson Education Limited © Roberts wants the new business to appeal to both types of people. For the first group, she envisions serving as a parts broker for NOS (“new old stock”), new parts that were manufactured many years ago and are still packaged in their original cartons. It can be a time-consuming process to find the right part. RASAS could also machine new parts to replicate those that are hard to find or that no longer exist. In addition, RASAS could assemble a library of parts and body manuals for old cars to serve as an information resource for do-it-yourself restorers. The do-it-yourselfers could come to RASAS for help in compiling parts lists, and RASAS could acquire the parts for them. For others, RASAS would take charge of the entire restoration. Roberts asked the director of service operations to take a good look at her Mustang and determine what needs to be done to restore it to the condition it was in when it came from the factory more than 40 years ago. She wants to restore this car in time to exhibit it at the Detroit Auto Show. If the car gets a lot of press, it will be a real public relations coup for RASAS— especially if Roberts decides to enter this new venture. Even if she does not, the car will be a showpiece for the rest of the business. Roberts asked the director of service operations to prepare a report about what is involved in restoring the car and whether it can be done in time for the Detroit show in 45 working days using PERT/CPM. The parts manager, the body shop manager, and the chief mechanic have provided the following estimates of times and activities that need to be done, as well as cost estimates: a. Order all needed material and parts (upholstery, windshield, carburetor, and oil pump). Time: 2 days. Cost (telephone calls and labor): $100. 1270131 - Pearson Education Limited © b. Receive upholstery material for seat covers. Cannot be done until order is placed. Time: 30 days. Cost: $2,100. c. Receive windshield. Cannot be done until order is placed. Time: 10 days. Cost: $800. d. Receive carburetor and oil pump. Cannot be done until order is placed. Time: 7 days. Cost: $1,750. e. Remove chrome from body. Can be done immediately. Time: 1 day. Cost: $200. f. Remove body (doors, hood, trunk, and fenders) from frame. Cannot be done until chrome is removed. Time: 1 day. Cost: $300. g. Have fenders repaired by body shop. Cannot be done until body is removed from frame. Time: 4 days. Cost: $1,000. h. Repair doors, trunk, and hood. Cannot be done until body is removed from frame. Time: 6 days. Cost: $1,500. i. Pull engine from chassis. Do after body is removed from frame. Time: 1 day. Cost: $200. j. Remove rust from frame. Do after the engine has been pulled from the chassis. Time: 3 days. Cost $900. k. Regrind engine valves. Do after the engine has been pulled from the chassis. Time: 5 days. Cost: $1,000. l. Replace carburetor and oil pump. Do after engine has been pulled from chassis and after carburetor and oil pump have been received. Time: 1 day. Cost: $200. m. Rechrome the chrome parts. Chrome must have been removed from the body first. Time: 3 days. Cost: $210. n. Reinstall engine. Do after valves are reground and carburetor and oil pump have been installed. Time: 1 day. Cost: $200. o. Put doors, hood, and trunk back on frame. The doors, hood, and trunk must have been repaired first. The frame must have had its rust removed first. Time: 1 day. Cost: $240. p. Rebuild transmission and replace brakes. Do so after the engine has been reinstalled and the doors, hood, and trunk are back on the 1270131 - Pearson Education Limited © frame. Time: 4 days. Cost: $2,000. q. Replace windshield. Windshield must have been received. Time: 1 day. Cost: $100. r. Put fenders back on. The fenders must have been repaired first, the transmission rebuilt, and the brakes replaced. Time: 1 day. Cost: $100. s. Paint car. Cannot be done until the fenders are back on and windshield replaced. Time: 4 days. Cost: $1,700. t. Reupholster interior of car. Must have received upholstery material first. Car must have been painted first. Time: 7 days. Cost: $2,400. u. Put chrome parts back on. Car must have been painted and chrome parts rechromed first. Time: 1 day. Cost: $100. v. Pull car to the Detroit Auto Show. Must have completed reupholstery of interior and have put the chrome parts back on. Time: 2 days. Cost: $1,000. Roberts wants to limit expenditures on this project to what could be recovered by s 1270131 - Pearson Education Limited © Solved Problem 1 MyOMLab Video Your company has just received an order from a good customer for a specially designed electric motor. The contract states that, starting on the 13th day from now, your firm will experience a penalty of $100 per day until the job is completed. Indirect project costs amount to $200 per day. The data on direct costs and activity precedence relationships are given in Table 7.2 . 1270131 - Pearson Education Limited © Table 7.2 Electric Motor Project Data Activity Normal Normal Crash Crash Immediate Time Cost ($) Time Cost Predecessor(s) (days) ($) (days) A 4 1,000 3 1,300 None B 7 1,400 4 2,000 None C 5 2,000 4 2,700 None D 6 1,200 5 1,400 A E 3 900 2 1,100 B F 11 2,500 6 3,750 C G 4 800 3 1,450 D, E H 3 300 1 500 F, G a. Draw the project network diagram. b. What completion date would you recommend? 1270131 - Pearson Education Limited © Solution a. The network diagram, including normal activity times, for this procedure is shown in Figure 7.9 . Keep the following points in mind while constructing a network diagram. A. Always have start and finish nodes. B. Try to avoid crossing paths to keep the diagram simple. C. Use only one arrow to directly connect any two nodes. D. Put the activities with no predecessors at the left and point the arrows from left to right. E. Be prepared to revise the diagram several times before you come up with a correct and uncluttered diagram. b. With these activity durations, the project will be completed in 19 days and incur a $700 penalty. Determining a good completion date requires the use of the minimum-cost schedule procedure. Using the data provided in Table 7.2 , you can determine the maximum crash-time reduction and crash cost per day for each activity. For example, for activity A 1270131 - Pearson Education Limited © Figure 7.9 Network Diagram for the Electric Motor Project Activity Crash Cost per Day ($) Maximum Time Reduction (days) A 300 1 B 200 3 C 700 1 D 200 1 E 200 1 F 250 5 G 650 1 H 100 2 Table 7.3 summarizes the analysis and the resultant project duration and total cost. The critical path is C–F–H at 19 days, which is the longest path in the network. The cheapest of these activities to crash is H, which costs only an extra $100 per day to crash. Doing so saves 1270131 - Pearson Education Limited © per day in indirect and penalty costs. If you crash this activity for two days (the maximum), the lengths of the paths are now The critical path is still C–F–H. The next cheapest critical activity to crash is F at $250 per day. You can crash F only two days because at that point you will have three critical paths. Further reductions in project duration will require simultaneous crashing of more than one activity (D, E, and F). The cost to do so, $650, exceeds the savings, $300. Consequently, you should stop. Note that every activity is critical. The project costs are minimized when the completion date is day 15. However, some goodwill costs may be associated with disappointing a customer who wants delivery in 12 days. 1270131 - Pearson Education Limited © Table 7.3 Project Cost Analysis Stage Crash Time Resulting Project Project Crash T Activity Reduction Critical Duration Direct Cost I (days) Path(s) (days) Costs, Added C Last ($) ( Trial ($) 0 — — C–F–H 19 10,100 — 3 1 H 2 C–F–H 17 10,100 200 3 2 F 2 A–D–G– 15 10,300 500 3 H B–E–G– H C–F–H 1270131 - Pearson Education Limited © 
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