The president of Walla Walla Boat Company, Mr. Seymore Books, has agreed to build a new sailboat for a consortium that plans to enter the boat in the next America's Cup Race. The project network, which consists of five tasks and four milestones, is the same network given in Figure 5.6 with the following task durations: 1. Task A: 1 month Task B: 10 months Task C: 4 months Task D: 9 months Task E: 2 months Mr. Books estimates that a cash payment of $5000 wll have to be made at milestone M1, while the consortium has agreed to pay Walla Walla $3000 at mile- stone M2 and $3000 when the boat is completed and delivered. Mr. Books wants to schedule the project in order to maximize the net present value of the cash flows, but isn't certain of an appropriate discount rate to use in this case. Thus, he has decided instead to simply treat money as a resource that can be spent or col- lected at various times and schedule the tasks (and milestones) to minimize dollar- months. Mr. Books claims that minimizing dollar-months is nearly equivalent to maximizing NPV. What is the makespan of this project based on the critical path? If Mr. Books minimizes total dollar-months, what is the makespan of the project? If Mr. Books maximizes the NPV of the project, assuming an annual discount rate of 20 percent, what is the project makespan? or turning it off FIGURE 5.6 Activity-on-Node (AON) Cash Flow Example Make payment of $5,000 Receive payment of $3,000 M1 Task A 2 months Task D 8 months Task C 4 months START END Task B 8 months Task E 3 months M2 Receive payment of $3,000 As indicated in Figure 5.6 and the following table, there are three milestones that rep- resent cash payments or receipts. Milestone M1 M2 END Event Pay $5,000 in salaries and/or materials Receive payment of $3,000 Receive final payment of $3,000 The president of Walla Walla Boat Company, Mr. Seymore Books, has agreed to build a new sailboat for a consortium that plans to enter the boat in the next America's Cup Race. The project network, which consists of five tasks and four milestones, is the same network given in Figure 5.6 with the following task durations: 1. Task A: 1 month Task B: 10 months Task C: 4 months Task D: 9 months Task E: 2 months Mr. Books estimates that a cash payment of $5000 wll have to be made at milestone M1, while the consortium has agreed to pay Walla Walla $3000 at mile- stone M2 and $3000 when the boat is completed and delivered. Mr. Books wants to schedule the project in order to maximize the net present value of the cash flows, but isn't certain of an appropriate discount rate to use in this case. Thus, he has decided instead to simply treat money as a resource that can be spent or col- lected at various times and schedule the tasks (and milestones) to minimize dollar- months. Mr. Books claims that minimizing dollar-months is nearly equivalent to maximizing NPV. What is the makespan of this project based on the critical path? If Mr. Books minimizes total dollar-months, what is the makespan of the project? If Mr. Books maximizes the NPV of the project, assuming an annual discount rate of 20 percent, what is the project makespan? or turning it off FIGURE 5.6 Activity-on-Node (AON) Cash Flow Example Make payment of $5,000 Receive payment of $3,000 M1 Task A 2 months Task D 8 months Task C 4 months START END Task B 8 months Task E 3 months M2 Receive payment of $3,000 As indicated in Figure 5.6 and the following table, there are three milestones that rep- resent cash payments or receipts. Milestone M1 M2 END Event Pay $5,000 in salaries and/or materials Receive payment of $3,000 Receive final payment of $3,000
