(Use this if you would like projects in rows) Project Number Success Parameter 1 2 3 4 5 6 7 8 9 2.15 3.24 2.44 5.25 1.16 2.53 3.25 2.37 4.97 Revenue/Loss (Millions $'s) Failure Challenged Success -1.136 2.813 5.316 -0.788 1.193 1.949 -0.878 1.915 3.699 -0.672 0.673 1.477 -2.724 4.229 6.576 -0.675 1.503 3.084 -3.670 4.616 6.834 -1.089 1.676 2.464 -1.791 1.691 2.792 (Use this if you would like projects in columns) Project SP Failure Challenged Success 1 2.15 -1.136 2.813 5.316 2 3.24 -0.788 1.193 1.949 3 2.44 -0.878 1.915 3.699 4 5.25 -0.672 0.673 1.477 5 1.16 -2.724 4.229 6.576 6 2.53 -0.675 1.503 3.084 7 3.25 -3.67 4.616 6.834 8 2.37 -1.089 1.676 2.464 9 4.97 -1.791 1.691 2.792 Peacock Programming, Inc. Reynold Peacock, owners of Peacock Programming, Inc., knows that he faces a daunting task. With several potential customer projects waiting to be accepted and limited resources at his disposal, some difficult choices lie ahead. Though the Lean software development strategies that his company has adopted have greatly increased the success rate of software projects (see Exhibit 1), a large portion still fall short (either partially or completely) of their stated goals. Exhibit 1 - Comparison of Software Development Methods A key factor in determining the chance of success for each project is the number of programmers allocated to its development. Specifically, using the outcomes of similar projects in the past, each project can characterized by a Success Parameter (SP), which can then be use to estimate the chance of a Successful or Challenged completion: Pr [ Success ]=0.80 N ( N +SP ) Pr [Challenged ]=0.20( N +NSP ) for the number of programmer assigned to that project (N). 2015. This case was prepared by Dr. Christopher P. Wright solely for the purpose of a class assignment. It is not intended to illustrate effective or ineffective management. This case is fictionalized and any resemblance to actual persons or organizations is coincidental. No portion of this case may be reproduced or transmitted in any form or by any means - electronic, mechanical, photocopying, recording or otherwise - without the express permission of Dr. Wright. Part 1 The company is currently considering which of nine available projects to accept. Additionally, the 30 programmers employed by the company (assume that they are salaried and, to start, that additional programmers will not be hired) must be allocated to accepted projects in order to maximize the expected return for Peacock Programming (assume they are risk neutral.) After consulting with area experts within the organization, Peacock was able to generate a table of Success Parameters for each project, as well as the expected revenues from each, given an outcome of Success, Challenged or Failure (see Appendix 1). Assignment Questions for Part 1: a) Assuming that programmers are not dedicated exclusively to one project (i.e., they may be partially assigned, so you need not assign only whole programmers), what is the optimal set of projects to initiate and number of programmers to allocate to each? What is the expected profit of this allocation? b) If, instead, each programmer has to be assigned to a project for the whole duration (i.e., no partial workers may be assigned), how would your answers in (a) change? c) Due to poor feedback when projects are minimally staffed, Peacock wants to implement a policy whereby any project accepted must be allocated at least five (5) workers. How would this policy affect your answers in (b)? Bonus: If Peacock can hire additional programmers for $90,000, how many (if any) should they hire and how would their hiring affect your answers in (c)? Appendix 1