BUSADM 475/002 Fall 2015
OPERATIONS PLANNING & CONTROL
HOMEWORK #2!
Due 5:30 PM (in class), October 27, 2015
Q1) (Project Management) The following information has been gathered for a project:
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a) Draw the network diagram.!
b) Calculate the slack for each activity.
c) Determine the critical path.!
d) How long will the project take?
Q2) (Project Management) Table given below contains information about an
environmental clean-up project. Shorten the project three weeks by finding the minimumcost schedule. Assume that project indirect costs and penalty costs are negligible. Identify
activities to crash while minimizing the additional crash costs.
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1!
Q3) (Sourcing Decisions in a Supply Chain) A publisher sells books to Barnes & Noble
at $12 each. The marginal production cost for the publisher is $1 per book. Barnes &
Noble prices the book to its customers at $24 and expects demand over the next two
months to be normally distributed, with a mean of 20,000 and a standard deviation of
5,000. Barnes & Noble places a single order with the publisher for delivery at the
beginning of the two-month period. Currently, Barnes & Noble discounts any unsold
books at the end of the two-months down to $3 and any books that did not sell at full
price sell at this price.
(a) How many books should Barnes & Noble order? What is their expected profit? How
many books do they expect to sell at a discount?!
(b) What is the profit that the publisher makes given Barnes & Noble’s actions?!
(c) A plan under discussion is for the publisher to refund Barnes & Noble $5 per book
that does not sell during the two-month period. As before Barnes & Noble will discount
them to $3 and sell any that remain.
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Under this plan, how many books will Barnes & Noble order?
What is the expected profit for Barnes & Noble?
How many books are expected to be unsold?
What is the expected profit for the publisher?
What should the publisher do?
