CMA Final · Strategic Cost Management · Network Analysis - PERT, CPM
A PERT network has two paths: A-C and B-D. Three-point estimates (optimistic, most likely, pessimistic, in days) are: A (2, 5, 8), C (4, 7, 10), B (3, 6, 15), D (3, 6, 9). What is the variance of the project completion time, taken from the critical path?
The project variance is 5. Path B-D has an expected time of 13 days against 12 days for A-C, so it is critical. Its activity variances are 4 and 1, which sum to 5. Adding all activities gives 7, and 2.24 is the standard deviation.
- A5Correct
- B7
- C2
- D2.24
Explanation
Expected times are A = 5, C = 7, B = (3+24+15)/6 = 7, D = (3+36... ) i.e. (3+24+9)/6 = 6. Path A-C = 12 days and B-D = 13 days, so B-D is critical. Variances are B = (12/6)² = 4 and D = (6/6)² = 1, giving 5. The option 7 wrongly adds the variances of all four activities, and 2.24 is the standard deviation, not the variance.
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