Nutri-Sam produces a line of vitamins and nutritional supplements. It recently introduced its Nutri-Sports Energy Bar, which

Question:

Nutri-Sam produces a line of vitamins and nutritional supplements. It recently introduced its Nutri-Sports Energy Bar, which is based on new scientific findings about the proper balance of macronutrients. The energy bar has become extremely popular among elite athletes and others. One distinguishing feature of the Nutri- Sports Energy Bar is that each bar contains 50 milli- grams of eicosapentaenoic acid (EPA), a substance strongly linked to reducing the risk of cancer but found in only a few foods, such as salmon. Nutri-Sam was able to include EPA in its sports bars because it had previ- ously developed and patented a process to refine EPA for its line of fish-oil capsules. Because of the success of the Nutri-Sports Energy Bar in the United States, Nutri-Sam is considering offer- ing it in Latin America. With its domestic facility cur- rently operating at capacity, the president of Nutri-Sam has decided to investigate the option of adding approxi- mately 10,000 square feet of production space to its facility in Latin America at a cost of $5 million. The project to expand the Latin American facility involves four major phases: (1) concept development, (2) definition of the plan, (3) design and construction, and (4) start-up and turnover. During the concept development phase, a program manager is chosen to oversee all four phases of the project and is given a budget to develop a plan. The outcome of the concept development phase is a rough plan, feasibility estimates for the project, and a rough schedule. Also, a justification for the project and a budget for the next phase are developed.

In the plan definition phase, the program manager selects a PM to oversee the activities associated with this phase. Plan definition consists of four major activities that are completed more or less concurrently: defining the project scope, developing a broad schedule of activities, developing detailed cost estimates, and developing a plan for staffing. The output of this phase is a detailed plan and proposal for management specifying how much the project will cost, how long it will take, and what the deliverables are. If the project gets management's approval and man- agement provides the appropriations, the project progresses to the third phase, design and construction. This phase con- sists of four major activities: detailed engineering, mobili- zation of the construction employees, procurement of production equipment, and construction of the facility. Typically, the detailed engineering and the mobilization of the construction employees are done concurrently. Once these activities are completed, construction of the facility and procurement of the production equipment are done concurrently. The outcome of this phase is the physical construc- tion of the facility. The final phase, start-up and turnover, consists of four major activities: prestart-up inspection of the facility, recruiting and training the workforce, solving start-up problems, and determining optimal operating parameters (called centerlining). Once the prestart-up inspection is completed, the workforce is recruited and trained at the same time that start-up problems are solved. Centerlining is initiated upon the completion of these activities. The desired outcome of this phase is a facility operating at design requirements.

The following table provides optimistic, most likely, and pessimistic time estimates for the major activities.

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Questions

1. Draw a network diagram for this project. Identify the four "near-critical" paths through the network diagram.

2. Find the probability that the project can be completed within 30 months. What is the probability that the project will take longer than 40 months? What is the probability that the project will take between 30 and 40 months?

3. Use Crystal Ball" (or another simulation package) to simulate the completion of this project 1000 times, assuming that activity times follow a triangular distribution. Estimate the mean and standard deviation of the project completion time. Compare your results to your answer to Question 2.

4. What types of information does Nutri-Sam's top management need that relate to the schedule to decide if they should approve this project at the end of the plan definition phase?