The US government has recently contracted with Boeing to build its fleet of airborne tankers. The project has been laid out with durations (in weeks), predecessors, and costs included: Activity Normal Time (weeks) Crashed Time (weeks) Normal Cost Crashed Cost Predecessor(s) A 8 5 $1,550 $1,950 -B 8 7 $1,400 $2,450 -C 10 8 $950 $2,350 BD 5 4 $2,300 $2,800 AE 4 3 $660 $1,050 BF 3 2 $600 $1,150 EG 10 6 $440 $1,120 C, D, F What is the critical path of the project? A-D-G B-C-G B-E-F-G If you wanted to shorten the overall duration of the project, which activity would you crash first? B G C E What would be the weekly crashing cost of the activity you selected in the previous question? (Display your answer to two decimal places.) Crash the project by 5 weeks. What is the total cost of crashing the project (just the additional cost, not total project cost)? (Display your answer to two decimal places.)
Question
The US government has recently contracted with Boeing to build its fleet of airborne tankers. The project has been laid out with durations (in weeks), predecessors, and costs included: Activity Normal Time (weeks) Crashed Time (weeks) Normal Cost Crashed Cost Predecessor(s) A 8 5 1,950 -B 8 7 2,450 -C 10 8 2,350 BD 5 4 2,800 AE 4 3 1,050 BF 3 2 1,150 EG 10 6 1,120 C, D, F What is the critical path of the project? A-D-G B-C-G B-E-F-G If you wanted to shorten the overall duration of the project, which activity would you crash first? B G C E What would be the weekly crashing cost of the activity you selected in the previous question? (Display your answer to two decimal places.) Crash the project by 5 weeks. What is the total cost of crashing the project (just the additional cost, not total project cost)? (Display your answer to two decimal places.)
Solution
To answer these questions, we first need to determine the critical path of the project. The critical path is the sequence of activities that must be completed on time for the entire project to be completed on time. It is the longest path through the project.
- The critical path of the project:
To determine the critical path, we need to calculate the earliest start and finish times (ES and EF) and the latest start and finish times (LS and LF) for each activity.
- Activity A: ES = 0, EF = 8 (since there are no predecessors)
- Activity B: ES = 0, EF = 8 (since there are no predecessors)
- Activity C: ES = 8, EF = 18 (since it can only start after B)
- Activity D: ES = 8, EF = 13 (since it can only start after A)
- Activity E: ES = 8, EF = 12 (since it can only start after B)
- Activity F: ES = 12, EF = 15 (since it can only start after E)
- Activity G: ES = 18, EF = 28 (since it can only start after C, D, and F)
So, the critical path is B-C-G.
- If you wanted to shorten the overall duration of the project, which activity would you crash first?
To determine which activity to crash first, we need to calculate the crash cost per week for each activity. This is done by subtracting the normal cost from the crashed cost and dividing by the difference in time.
- Activity A: (1550) / (8 - 5) = $133.33 per week
- Activity B: (1400) / (8 - 7) = $1050 per week
- Activity C: (950) / (10 - 8) = $700 per week
- Activity D: (2300) / (5 - 4) = $500 per week
- Activity E: (660) / (4 - 3) = $390 per week
- Activity F: (600) / (3 - 2) = $550 per week
- Activity G: (440) / (10 - 6) = $170 per week
So, we would crash activity G first, as it has the lowest crash cost per week.
- What would be the weekly crashing cost of the activity you selected in the previous question?
The weekly crashing cost of activity G is $170.
- Crash the project by 5 weeks. What is the total cost of crashing the project (just the additional cost, not total project cost)?
To crash the project by 5 weeks, we would need to crash the activities on the critical path. Since we've already determined that we would crash activity G first, we would crash it for 4 weeks (the maximum amount it can be crashed) at a cost of 680. We would then need to crash activity C for 1 week at a cost of 700. So, the total cost of crashing the project by 5 weeks would be 700 = $1380.
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In the weeks after a Boeing jetliner crashed in the Java Sea near Indonesia last year, killing all 189 people on board, the manufacturer defended the plane’s safety features and publicly resisted calls to make changes to its system and pilot training procedures.Get a curated selection of 10 of our best stories in your inbox every weekend.This month, following a second deadly crash of a 737 Max, a worldwide grounding of the planes by regulators, a stock slide and the loss of a multibillion-dollar contract, Boeing is taking a new approach. The company invited hundreds of pilots and airline partners to its Renton, Wash., assembly facility Wednesday in a hastily arranged meeting to explain new safety enhancements.Boeing’s shift in tone — CEO Dennis Muilenburg said in a statement this week the company has been “humbled” — reflects growing pressure on the company’s bottom line as its fleet of jetliners sits idle at airports. It also comes as airlines that have placed orders for hundreds of additional 737 Max jets begin to question those investments. Last week, Indonesia’s national airline, Garuda, said it canceled its order for 49 jets because of “consumers’ low confidence” in the airplanes following the crashes.Indonesia's Garuda airlines moves to cancel order for 49 Boeing 737 Max jetsThe Chicago-based manufacturer is working to fulfill orders for more than 4,000 737 Max jets from dozens of airlines, according to analysts at Cowen Washington Research Group.Boeing is responding to rising public concerns about its Max planes in an effort to save the company’s image and prevent the loss of more business, said Shem Malmquist, an active Boeing 777 captain and a visiting professor at the Florida Institute of Technology.“They took a different tack — a tack they should have taken in the first place,” Malmquist said.The company’s changing response may be partly a function of how unusual the situation is, said Seth Seifman, an analyst at JPMorgan.“The way that it took off in the press and on social media is not something that Boeing is used to,” he said. “It probably took some time to put together a public strategy to deal with that.”Boeing has continued to defend the safety of its planes and deflect claims that its automation software may have contributed to either of the two crashes.At the Renton event, officials from the aerospace giant defended the embattled 737 Max as the culmination of 50 years of aircraft development in which they said safety has been the first priority.They also pushed back on the idea that something is inherently wrong with the aircraft development process within Boeing. Company officials also defended the process used to determine that the plane met government requirements. The process used to certify the plane is the subject of congressional inquiries, a Department of Transportation audit and a criminal probe by the Department of Justice.The plane maker has to walk a fine line in its public statements. Admitting that any fault lies in Boeing’s planes, including software, would create legal liability for the company and damage its reputation for safety, said Scott Hamilton, managing director at Leeham Company, an aviation consultant. “Their public statements are completely driven by what their lawyers will allow them to say,” Hamilton said.
The Rideon Water Company (ROW) produces a line of non-motorised boats. ROW uses a normal costing system and allocates manufacturing overhead using direct manufacturing labour cost. The following data are for 2018:Budgeted production volume (number of boats)110Budgeted manufacturing overhead costs$121,000Budgeted direct manufacturing labour costs$220,000Actual production volume (number of boats)95Actual manufacturing overhead costs$121,950Actual direct manufacturing labour costs$229,000 Calculate the amount of under or over allocation overhead cost
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