START

Activity Activity time Early Start Early Finis Late Start Late Finish Slack

A 6 0 6 2 8 2
B 8 0 8 0 8 0
C 12 8 20 8 20 0
D 4 20 24 22 26 2
E 6 20 26 20 26 0
F 15 26 41 26 41 0
G 12 26 38 29 41 3
H 8 41 49 41 49 0

Note: Activities in the critical path is in red text.

Project 49 weeks
FINISH
 START

Activity Activity ti Early Start Early Finis Late Start Late Finish Slack Standard DVariance
Project 52 3.79 14.33
A 8 0 8 0 8 0 1.33 1.78
B 7 8 15 14 21 6 0.33 0.11
C 12 8 20 8 20 0 2 4
D 5 8 13 15 20 7 0.67 0.44
E 10 20 30 20 30 0 2 4
F 9 20 29 21 30 1 2 4
G 15 30 45 30 45 0 1.67 2.78
H 7 45 52 45 52 0 1.33 1.78

Optimistic Most LikelyPessimisticActivity ti Standard DVariance

A 4 8 12 8 1.33 1.78
B 6 7 8 7 0.33 0.11
C 6 12 18 12 2 4
D 3 5 7 5 0.67 0.44
E 6 9 18 10 2 4
F 5 8 17 9 2 4
G 10 15 20 15 1.67 2.78
H 5 6 13 7 1.33 1.78
Project results
Sum of crit act var 14.33
Square root of total SD 3.79

Probability in 44 weeks where in the expected completion time is 52 weeks

Z= 44 - 52
3.79
= -2.110818

Probability 1.13%

44 weeks 52weeks

Probability in 57 weeks where in the expected completion time is 52 weeks

Z= 57 - 52
3.79
= 1.319261

Probability 90.65%

52weeks 57 weeks

Tell the owner that the 44 week deadline has a very low chance of finishing the project.
The possibility to finish within 44 weeks if necessary resources is added to shorten the project completion time
FINISH
mpletion time
 Optimistic Most LikelyPessimisticActivity ti Variance
1 5 8 17 9 0.03
2 7 10 13 10 0.44
3 3 5 7 5 0.11
4 1 3 5 3 0.03
5 4 6 8 6 0.03
6 3 3 3 3 0.11
7 3 4 5 4 0.44
0.11
I 1.5 2 2.5 2 0.03
Project results
Sum of crit act var 1.06
Square root of total 1.03

Activity Activity ti Early Start Early Finis Late Start Late Finish Slack Variance
Project 15 1.06
A 2 0 2 0 2 0 0.03
B 3 2 5 2 5 0 0.44
C 2 0 2 1 3 1 0.11
D 2 2 4 3 5 1 0.03
E 1 5 6 10 11 5 0.03
F 2 6 8 11 13 5 0.11
G 4 5 9 5 9 0 0.44
H 4 9 13 9 13 0 0.11
I 2 13 15 13 15 0 0.03

x for a probability of 99% 17.40 weeks

To solve this manually

Find the value of z given the probability 99% using the table

0.5
0.49

𝑧=(𝑥−𝑥 ̅)
The nearest z value for 0.49 is 2.33

/𝑠𝑑
From

𝑥=𝑥 ̅+z*sd
Solving for x

𝑥=15+2.33∗1.03
= 17.40 weeks

Time required to assure a 99% chance of finishing the project

FINISH
 Consider the following s
that develops invention
consultant to make reco
AM, you meet Adam Sm
Smith expresses his wis
company must make so
At 10:05, you and Smith
Really Big Ideas, Inc has
new product using new
Success (50%) 900,000.00 recently created. Surpri
applications. Really Big
two projects or to deve
EV= 400,000.00 Bertrand arrived. After a
Smoke Detector She says that a smoke a
can detect smoke and fl
Fail (50%) (100,000.00) cost $100,000 to develo
Smoke $1,000,000. The probab
Detector None be outdone, Ben Bertra
device to develop. It use
0 develop and expects to
80% success.
With the results of the m
option? Make a decision
Motion Detector
Success (80%) 390,000.00

EV= 310,000.00

Fail (20%) (10,000.00)

Consider the following scenario, Really Big Ideas, Inc. A small company
that develops inventions for the consumer market, has recruited you as a
consultant to make recommendation on critical business decision. AT 10
AM, you meet Adam Smith, The VP in charge in product development.
Smith expresses his wish for an outside opinion on the decision of the
company must make soon. Your job is to supply an informed opinion.
At 10:05, you and Smith enter the meeting room. Smith explains that the
Really Big Ideas, Inc has 3-month window of opportunity to develop a
new product using new pattern recognition software the company
recently created. Surprisingly, the software adapts easily to different
applications. Really Big Ideas, Inc only has resources and time to develop
` Project Manager Aisha Ali and Ben
two projects or to develop none.
Bertrand arrived. After a brief introduction, Aisha Ali launches her pitch.
She says that a smoke and fire detector is the best product to develop. It
can detect smoke and flames beyond an ordinary detector can. It will
cost $100,000 to develop and if succeeds it can generate an income of
$1,000,000. The probability of success was estimated to be 50%. Not to
be outdone, Ben Bertrand announces that a motion detector is a better
device to develop. It uses conventional lighting will only cost $10,000 to
develop and expects to generate $400,000 revenue and probability of
80% success.
With the results of the meeting, Smith asks you what is the better
option? Make a decision tree to support your advice.
 EV= 675,000.00
Smoke Detector

Smoke
Detector None

Motion Detector

EV= 310,000.00
 Consider the following i
Ideas decision scenario.
VP Smith calls you the fo
has learned a new inform
wants to know if you ca
information. Smith tells
detector must pass an U
certification before in ca
for the motion detector.
1. A commercial grade c
(originally expected). Ho
commercial grade certifi
Commercial Cert (30%) 895,000.00 standard.
2. A less stringent reside
would only generate $80
Residential Cert(60%) 695,000.00 3. There is a 10% chance
any certification test. In
will lose the initial $100
4. The UL charges $5000
Did not pass (10%) (105,000.00) applications.
You task is to construct a
the new information.
0

Success (8 390,000.00

Fail (20%) (10,000.00)

Consider the following information, which continues the Really Big
Ideas decision scenario.
VP Smith calls you the following day and reports that the company
has learned a new information that may affect the decision. Smith
wants to know if you can prepare a new analysis using the new
information. Smith tells you that the proposed smoke and fire
detector must pass an Underwriters Laboratory (UL) safety
certification before in can be sold. This certification is not necessary
for the motion detector. The new information is given below:
1. A commercial grade certification will result in $1,000,000 sales
(originally expected). However, the likelihood of obtaining the
commercial grade certification is only 30% due to the stringent
standard.
2. A less stringent residential grade certification is 60% likely but
would only generate $800,000 sales.
3. There is a 10% chance that the smoke and detector will not pass
any certification test. In this case a complete failure. The company
will lose the initial $100,000 investment cost.
4. The UL charges $5000 non-refundable fee for certification
applications.
You task is to construct and evaluate a new decision tree based on
the new information.
3. Given this payoff table determine the appropriate decision on which alternative to use on the
given criterion

OUTCOME
Alternative
1 2 3 4 5
A 100 70 115 95 60
B 95 120 120 90 150
C 180 130 60 160 120
D 80 75 50 100 95
E 60 140 100 170 160

a. Criterion of realism using

alpha= 0.6
OUTCOME Weighted Mean between the
Alternative max(optimistic) and the
1 2 3 4 5
min(pessimistic)
A 100 70 115 95 60 93 93
B 95 120 120 90 150 126
C 180 130 60 160 120 132
D 80 75 50 100 95 80
E 60 140 100 170 160 126
b.
Laplace
OUTCOME Take the average of all payoff
Alternative
1 2 3 4 5
A 100 70 115 95 60 88
B 95 120 120 90 150 115
C 180 130 60 160 120 130
D 80 75 50 100 95 80
E 60 140 100 170 160 126

c.
Minimax
Regret
Oppurtunity Loss T
OUTCOME
Alternative Alternative
1 2 3 4 5
A 100 70 115 95 60 A
B 95 120 120 90 150 B
C 180 130 60 160 120 C
D 80 75 50 100 95 D
E 60 140 100 170 160 E
Note:
Red Pessimistic
Green Optimistic

Red Pessimistic
Green Optimistic

Oppurtunity Loss Table

OUTCOME
1 2 3 4 5 Maximum
80 70 5 75 100 100
85 20 0 80 10 85
0 10 60 10 40 60
100 65 70 70 65 100
120 0 20 0 0 120
 Build
Success(50%)

EV= 14,500,000

Fail(50%)
Conduct R&D -5000000

Conduct R&D

No R&D

0
Note: If no probability indicated, treat each outcome as equally likely. Hemmingway, Inc., is considering a $5 millio
development (R&D) project for the next tw
appear promising, but Hemmingway’s presi
High (0.20) 35,000,000 because the probability that the R&D proje
only 0.50. Secondly, the president knows th
successful, it will require that the company
facility at a cost of $20 million in order to m
Moderate(.45) 20,000,000 If the facility is built, uncertainty remains ab
EV= 17,750,000 thus uncertainty about the profit that will b
option is that if the R&D project is successfu
the rights to the product for an estimated $
Build option, the company would not build the $2
Low(.35) 5,000,000 facility. The table below shows the expected
outcome.
High demand 59 M
Moderate Demand 45 M
Sell Low Demand 34 M
Develop a decision tree and determine the
company. Determine if the company should
25,000,000 project? If so, what is the best alternative a
 Build
Success(50%)

EV= 15,000,000

Fail(50%)
Conduct R&D -5000000

Conduct R&D

No R&D
ay, Inc., is considering a $5 million research and
nt (R&D) project for the next two years. Profit projections
mising, but Hemmingway’s president is concerned
e probability that the R&D project will be successful is
econdly, the president knows that even if the project is
it will require that the company build a new production
cost of $20 million in order to manufacture the product.
y is built, uncertainty remains about the demand and
ainty about the profit that will be realized. Another
at if the R&D project is successful, the company could sell
o the product for an estimated $25 million. Under this
company would not build the $20 million production
table below shows the expected income for each market

nd 59 M
Demand 45 M
nd 34 M
decision tree and determine the best alternative for the
Determine if the company should push through the
so, what is the best alternative after that?

High (0.20) ###

 Moderate(. ###
EV= ###

Build
Low(.35) ###
Build

Sell

###
Month Fund Price 3-month MA 3-month WMA Exp Smoothing
Error Error Error
1 100.00
2 75.00 100.00 25
3 90.00 90.00 0
4 90.00 86.50 3.50 90.00 0
5 131.00 88.75 42.25 88.50 42.50 90.00 41
6 130.00 96.50 33.50 114.60 15.40 106.40 23.6
7 120.00 110.25 9.75 126.30 6.30 115.84 4.16
8 120.00 117.75 2.25 124.10 4.10 117.50 2.496
9 95.00 125.25 30.25 121.00 26.00 118.50 23.5024
10 85.00 116.25 31.25 105.00 20.00 109.10 24.10144
11 75.00 105.00 30.00 91.50 16.50 99.46 24.46086
12 80.00 93.75 13.75 80.00 - 89.68 9.676518
13 83.75 83.75 79.00 79.00 85.81 85.80591
14 80.00 80.00 31.50 31.50 51.48 51.48355
15 77.50 77.50 8.00 8.00 30.89 30.89013
16 80.00 80.00 - - 18.53 18.53408
17 #DIV/0! #DIV/0! - - 11.12 11.12045
18 #DIV/0! #DIV/0! - - 6.67 6.672268
19 #DIV/0! #DIV/0! - - 4.00 4.003361
20 #DIV/0! #DIV/0! - - 2.40 2.402016
Forecast #DIV/0! - 1.44

MAD 24.13 14.87 20.47

 A 570
B 3.6
Month Web Visits Trend Forecast Error Month Web Visits
1 590.00 573.60 16.4 1 537
2 535.00 577.20 42.2 2 375
3 616.00 580.80 35.2 3 419
4 575.00 584.40 9.4 4 276
5 588.00 588 5 445
6 591.60 591.6 6 512
7 120.00 595.20 475.2 7 670
8 120.00 598.80 478.8 8 561
9 95.00 602.40 507.4 9 705
10 85.00 606.00 521 10 619
11 75.00 609.60 534.6 11 768
12 80.00 613.20 533.2 12 645
13 822 616.80 205.2 13 822
14 677 620.40 56.6 14 677
15 1031 624.00 407 15 1031
16 657 627.60 29.4 16 657
17 983 631.20 351.8 17 983
18 774 634.80 139.2 18 774
19 1210 638.40 571.6 19 1210
20 811 642.00 169 20 811
21 1137 645.60 491.4 21 1137
22 763 649.20 113.8 22 763
23 1225 652.80 572.2 23 1225
24 941 656.40 284.6 24 941
25 660.00 25

MAD 361.0833333

591.04
591.1514018692
591
591.0713043478

591.04
591.151402
591
591.071304
 587.00

1 590 573.60 597.38

2 535 577.20 551.56 1.041450777
3 616 580.80 604.87 0.955578512
4 575 584.40 558.44
5 588 612.3730569948 588.00 612.37
6 591.6 565.3202479339 591.60 565.32
Exp Smoothing Error Month Web Visits WMA Error
1 537
537.00 162 2 375
439.80 20.8 3 419
427.32 151.32 4 276 429.40 153.4
336.53 108.472 5 445 338.70 106.3
401.61 110.3888 6 512 389.10 122.9
467.84 202.1555 7 670 444.70 225.3
589.14 28.13779 8 561 577.60 16.6
572.26 132.7449 9 705 583.90 121.1
651.90 32.90205 10 619 654.80 35.8
632.16 135.8392 11 768 633.20 134.8
713.66 68.66433 12 645 710.70 65.7
672.47 149.5343 13 822 676.70 145.3
762.19 85.18629 14 677 758.10 81.1
711.07 319.9255 15 1031 714.10 316.9
903.03 246.0298 16 657 883.00 226
755.41 227.5881 17 983 773.20 209.8
891.96 117.9648 18 774 894.80 120.8
821.19 388.8141 19 1210 813.30 396.7
1,054.47 243.4744 20 811 1,033.80 222.8
908.39 228.6103 21 1137 923.30 213.7
1,045.56 282.5559 22 763 1,053.80 290.8
876.02 348.9776 23 1225 884.80 340.2
1,085.41 144.4089 24 941 1,068.80 127.8
998.76 25 992.12

MAD 171.1519 MAD 174.9429

 A 347.333333333
B 3.85585585586
Month Sales Trend Forecast Error Month Sales Exp Smoothing Error
1 345 351.19 6.189189 1 345
2 411 355.05 55.95495 2 411 345.00 66
3 266 358.90 92.9009 3 266 358.20 92.2
4 347 362.76 15.75676 4 347 339.76 7.24
5 506 366.61 139.3874 5 506 341.21 164.792
6 278 370.47 92.46847 6 278 374.17 96.1664
7 411 374.32 36.67568 7 411 354.93 56.06688
8 510 378.18 131.8198 8 510 366.15 143.8535
9 198 382.04 184.036 9 198 394.92 196.9172
10 387 385.89 1.108108 10 387 355.53 31.46624
11 344 389.75 45.74775 11 344 361.83 17.82701
12 412 393.60 18.3964 12 412 358.26 53.7384
13 415 397.46 17.54054 13 415 369.01 45.99072
14 395 401.32 6.315315 14 395 378.21 16.79257
15 298 405.17 107.1712 15 298 381.57 83.56594
16 377 409.03 32.02703 16 377 364.85 12.14725
17 418 412.88 5.117117 17 418 367.28 50.7178
18 522 416.74 105.2613 18 522 377.43 144.5742
19 421 420.59 0.405405 19 421 406.34 14.65939
20 384 424.45 40.45045 20 384 409.27 25.27249
21 455 428.31 26.69369 21 455 404.22 50.78201
22 506 432.16 73.83784 22 506 414.37 91.62561
23 478 436.02 41.98198 23 478 432.70 45.30049
24 613 439.87 173.1261 24 613 441.76 171.2404
25 344 443.73 99.72973 25 344 476.01 132.0077
26 286 447.59 161.5856 26 286 449.61 163.6062
27 455 451.44 3.558559 27 455 416.88 38.11508
28 634 455.30 178.7027 28 634 424.51 209.4921
29 502 459.15 42.84685 29 502 466.41 35.59365
30 388 463.01 75.00901 30 388 473.53 85.52508
31 427 466.86 39.86486 31 427 456.42 29.42006
32 561 470.72 90.27928 32 561 450.54 110.4639
33 447 474.58 27.57658 33 447 472.63 25.62884
34 395 478.43 83.43243 34 395 467.50 72.50307
35 414 482.29 68.28829 35 414 453.00 39.00246
36 522 486.14 35.85586 36 522 445.20 76.79803

MAD 65.47497 MAD 77.05979

Month Sales 5-month MA Error
1 345
2 411
3 266
4 347
5 506
6 278 375.00 97
7 411 361.60 49.4
8 510 361.60 148.4
9 198 410.40 212.4
10 387 380.60 6.4
11 344 356.80 12.8
12 412 370.00 42
13 415 370.20 44.8
14 395 351.20 43.8
15 298 390.60 92.6
16 377 372.80 4.2
17 418 379.40 38.6
18 522 380.60 141.4
19 421 402.00 19
20 384 407.20 23.2
21 455 424.40 30.6
22 506 440.00 66
23 478 457.60 20.4
24 613 448.80 164.2
25 344 487.20 143.2
26 286 479.20 193.2
27 455 445.40 9.6
28 634 435.20 198.8
29 502 466.40 35.6
30 388 444.20 56.2
31 427 453.00 26
32 561 481.20 79.8
33 447 502.40 55.4
34 395 465.00 70
35 414 443.60 29.6
36 522 448.80 73.2

MAD 71.86452
 A 22.1052631578947
Seasonal Indices
Qtr 1 0.730256
Qtr 2 0.927179
Qtr 3 0.745299
Qtr 4 1.597265

Linear Trend Forecast B 0.680451127819549

Time Index Order Seasonally Adjusted TreError
Qtr 1 1 18.6 16.64 1.96
Qtr 2 2 23.5 21.76 1.74
Year1
Qtr 3 3 20.4 18.00 2.40
Qtr 4 4 41.9 39.66 2.24
Qtr 1 5 18.1 18.63 0.53
Qtr 2 6 24.7 24.28 0.42
Year2
Qtr 3 7 19.5 20.03 0.53
Qtr 4 8 46.3 44.00 2.30
Qtr 1 9 22.4 20.61 1.79
Qtr 2 10 28.8 26.80 2.00
Year3
Qtr 3 11 21 22.05 1.05
Qtr 4 12 45.5 48.35 2.85
Qtr 1 13 23.2 22.60 0.60
Qtr 2 14 27.6 29.33 1.73
Year4
Qtr 3 15 24.4 24.08 0.32
Qtr 4 16 47.1 52.70 5.60
Qtr 1 17 24.5 24.59 0.09
Qtr 2 18 31 31.85 0.85
Year5
Qtr 3 19 23.7 26.11 2.41
Qtr 4 20 52.8 57.05 4.25
Qtr 1 21 26.58
Forecast Qtr 2 22 34.38
Year6
Qtr 3 23 28.14
Qtr 4 24 61.39

MAD 1.78

Chart Title
60

50

40

30

20
50

40

30

20

10

0
0 5 10 15 20 25

Order Seasonally Adjusted Trend

 A 22.10526
Linear Trend Forecast B 0.680451
Time Index Order Trend Error
Qtr 1 1 18.6 22.79 4.19
Qtr 2 2 23.5 23.47 0.03
Year1
Qtr 3 3 20.4 24.15 3.75
Qtr 4 4 41.9 24.83 17.07
Qtr 1 5 18.1 25.51 7.41
Qtr 2 6 24.7 26.19 1.49
Year2
Qtr 3 7 19.5 26.87 7.37
Qtr 4 8 46.3 27.55 18.75
Qtr 1 9 22.4 28.23 5.83
Qtr 2 10 28.8 28.91 0.11
Year3
Qtr 3 11 21 29.59 8.59
Qtr 4 12 45.5 30.27 15.23
Qtr 1 13 23.2 30.95 7.75
Qtr 2 14 27.6 31.63 4.03
Year4
Qtr 3 15 24.4 32.31 7.91
Qtr 4 16 47.1 32.99 14.11
Qtr 1 17 24.5 33.67 9.17
Qtr 2 18 31 34.35 3.35
Year5
Qtr 3 19 23.7 35.03 11.33
Qtr 4 20 52.8 35.71 17.09
Qtr 1 21 36.39
Forecast Qtr 2 22 37.08
Year6
Qtr 3 23 37.76
Qtr 4 24 38.44

MAD 8.23

Chart Title
60

50

40

30

20

10

0
0 5 10 15 20 25

Order Trend