CMA Final · Strategic Cost Management · Network Analysis - PERT, CPM
A project has a single critical path of three activities, and no other path becomes critical during the crashing considered here. Activity A can be crashed by up to 2 days at Rs 4,000 per day; B by up to 3 days at Rs 5,000 per day; C by up to 1 day at Rs 3,000 per day. What is the minimum extra direct cost to shorten the project by 4 days?
The minimum extra cost is Rs 16,000. Crash the cheapest activities first within their limits: C for 1 day costs Rs 3,000, A for 2 days costs Rs 8,000, and B for 1 day costs Rs 5,000. Ignoring the crash limits would understate the cost.
- ARs 12,000
- BRs 16,000Correct
- CRs 18,000
- DRs 20,000
Explanation
Crash in order of lowest cost slope: C for 1 day = 3,000; A for 2 days = 8,000; then B for the remaining 1 day = 5,000. Total = 16,000. Rs 12,000 wrongly assumes C can be crashed 4 days, ignoring its 1-day limit.
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