A company could add $10,000 per week in revenues if the project depicted in Table 7.10 could be shortened. Table 7.10
Four possible options exist to crash activities: crash A by one week at a cost of $6,000;crash C by two weeks at a cost of $15,000;crash E by one week at a cost of $2,000;and crash I one week at a cost of $7,000.What is the maximum amount of additional profit that can be made by crashing an option (or options)?

Question

A company could add $10,000 per week in revenues if the project depicted in Table 7.10 could be shortened. Table 7.10
 Four possible options exist to crash activities: crash A by one week at a cost of $6,000;crash C by two weeks at a cost of $15,000;crash E by one week at a cost of $2,000;and crash I one week at a cost of $7,000.What is the maximum amount of additional profit that can be made by crashing an option (or options)?

Quizplus · Accepted Answer

To find the maximum additional profit that can be made, we need to identify the option(s) that will reduce the project duration by the least cost, but will still result in a net gain of at least $10,000 in revenue per week.

We can calculate the additional cost and revenue for each option as follows:

- Option 1: Crash A by one week at a cost of $6,000, and gain $10,000 in revenue per week. This results in a net gain of $4,000 per week.
- Option 2: Crash C by two weeks at a cost of $15,000, and gain $20,000 in revenue per week. This results in a net gain of $5,000 per week.
- Option 3: Crash E by one week at a cost of $2,000, and gain $10,000 in revenue per week. This results in a net gain of $8,000 per week.
- Option 4: Crash I by one week at a cost of $7,000, and gain $10,000 in revenue per week. This results in a net gain of $3,000 per week.

Based on these calculations, Option 3 provides the best choice as it results in the lowest additional cost while still achieving a net gain of at least $10,000 in revenue per week. Therefore, the best choice is to crash activity E by one week at a cost of $2,000.

Note: It is important to note that this is only one possible solution based on the given information. Other combinations of options may also result in a net gain of at least $10,000 in revenue per week, but they may have different costs and corresponding net gains.

A Company Could Add $10,000 Per Week in Revenues If