Question

Three critical path activities are candidates for crashing on a CPM network. Activity details are in the table below.

| activity | normal | normal | crash | crash |
| | time | cost | duration | cost |
| A | 9 days | $8,000 | 7 days | $12,000 |
| B | 5 days | $2,000 | 3 days | $10,000 |
| C |12 days| $9,000 | 11 days | $12,000 |

What is the crash cost per unit time for activity A?

Answer 1

The crash cost per unit time for activity A is calculated as the difference between the crash cost and normal cost divided by the difference in days, which equals $2,000 per day.

Step-by-step explanation:

The crash cost per unit time for activity A is calculated by subtracting the normal cost from the crash cost and then dividing the result by the change in time (the difference between the normal time and the crash duration).

In the case of activity A:

• Normal Cost = $8,000
• Crash Cost = $12,000
• Normal Time = 9 days
• Crash Duration = 7 days

To find the crash cost per unit time, we use the formula:

Crash Cost per Unit Time for Activity A = (Crash Cost - Normal Cost) / (Normal Time - Crash Duration)

Plugging in the values for Activity A:

Crash Cost per Unit Time for Activity A = ($12,000 - $8,000) / (9 days - 7 days)

Crash Cost per Unit Time for Activity A = $4,000 / 2 days

Crash Cost per Unit Time for Activity A = $2,000 per day.