1. The PotamiaConstruction Co. (PCC) is developing plans to erect a new hospital building.
PCC has established the project activities, their immediate predecessor activities
together with their estimated activity durations according to the information described in
the following table.
a. Prepare an AON for the whole construction activity based on the information.
b. Find out the critical path and critical activities for the same project.
c. Prepare a Gantt Chart (Horizontal Bar Chart) for the whole project.
2. Ross Hopkins, president of Hopkins Hospitality, has developed the tasks, durations, and
predecessor relationships in the following table for building new motels. Draw the AON
network and answer the questions that follow.
a. What is the expected (estimated) time for activity C?
b. What is the variance for activity C?
c. Based on the calculation of estimated times, what is the critical path?
d. What is the estimated time of the critical path?
e. What is the activity variance along the critical path?
f. What is the probability of completion of the project before week 36?
g. What is the probability that the project will be completed between 36 weeks and
39 weeks?
h. How many weeks results in a 93% probability of completion of the same project?
3. Kimpel Products makes pizza ovens for commercial use. James Kimpel, CEO, is
contemplating producing smaller ovens for use in high school and college kitchens. The
activities necessary to build an experimental model and related data are given in the
following table:
a. What is the project completion date?
b. Crash this project to 10 weeks at the least cost assuming the indirect cost per day
amounts to $300.
c. Crash this project to 7 weeks (which is the maximum it can be crashed) at the
least cost assuming same indirect cost per day as in (b).
4. Lenovo uses the ZX-81 chip in some of its laptop computers. The prices for the chip during
the past 12 months were as follows:
a. Use a 2-month moving average on all the data and plot the averages and the
prices.
b. Use a 3-month moving average and add the 3-month plot to the graph created in
part (a).
c. Which one is better (using the mean absolute deviation): the 2-month average or
the 3-month average?
d. Compute the forecasts for each month using exponential smoothing, with an
initial forecast for January of $1.80. Use 𝛼 = .1, then 𝛼 = .3, and finally 𝛼 = .5. Using
MAPE, which 𝛼 is the best?
5. A logistics company has been in business for four years and wants to develop monthly
indices. Inventory monthly quantities for these years are shown below. Develop monthly
indices Estimate next year forecast for the months: April, July and December, assuming
that the annual inventory quantity will be 1500.
6. Income at the architectural firm Spraggins and Yunes for the period February to July was
as follows:
a. Use trend-adjusted exponential smoothing to forecast the firm’s August income.
Assume that the initial forecast average for February is $65,000 and the initial
trend adjustment is 0. The smoothing constants selected are 𝛼 = .1 and 𝛽 = .2.
b. Resolve the problem with 𝛼 = .1 and 𝛽 = .8. Using MSE, determine which
smoothing constants provide a better forecast
7. The University athletic department works on its budget for the next year basketball
attendance. Table below shows the accumulated number of seasonal basketball
attendance for the two last years. The University, due to the good performance of the
basketball team last year, expects the annual ticket sales to increase by 25%. What will
be the seasonal demand?
8. Dr. Lillian Fok, a New Orleans psychologist, specializes in treating patients who are
agoraphobic (i.e., afraid to leave their homes). The following table indicates how many
patients Dr. Fok has seen each year for the past 10 years. It also indicates what the
robbery rate was in New Orleans during the same year:
Using trend (linear regression) analysis, predict the number of patients Dr. Fok will see
in years 11 and 12 as a function of time. How well does the model fit the data?
9. The table below compares the accuracy of two forecasting methods used by company
XYZ to forecast its monthly sales of one of its product. The data pertain to the forecast
and actual sales levels over a period of five months. What is the value of the tracking
signal as of the end of May? Which method provides better forecast accuracy?
10. Dave Fletcher, the general manager of North Carolina Engineering Corporation (NCEC),
thinks that his firm’s engineering services contracted to highway construction firms are
directly related to the volume of highway construction business contracted with
companies in his geographic area. He wonders if this is really so, and if it is, can this
information help him plan his operations better by forecasting the quantity of his
engineering services required by construction firms in each quarter of the year? The
following table presents the sales of his services and total amounts of contracts for
highway construction over the past eight quarters:
a. Using this data, develop a regression equation for predicting the level of demand
of NCEC’s services.
b. Determine the coefficient of correlation and the standard error of the estimate.
