Wolaita Sodo University Engineering College Mechanical

Engineering Department
Work sheet for Industrial Management and Engineering Economics
For Chapter -03  Forecasting
1. In WSU, the number of daily calls for repair of speedy copy machines has been recorded
as follows:
October Calls
1 92
2 120
3 105
4 165
5 125
6 111
7 178
8 97
9
Compute the following:
a. Three period simple moving average forecast for the data and error on each day
b. Three period weighted moving average forecast for the data with 0.5, 0.3 and 0.2 weight
from most recent to least recent data.
c. Exponential smoothing with alpha=0.2 and 7th day forecast being 160
d. Which of the two forecast is better and why?
2. .Sunrise baking company markets doughnuts through a chain of food stores. It has been
experiencing over and under production because of forecasting errors. The following data
are its demand in dozens of doughnuts for the past four weeks. Doughnuts are made for
the following day: For example Sunday’s doughnut production is for Monday’s sale,
Monday’s production is for Tuesday’s sales and so forth. The baker is closed Saturday, so
Friday’s production must satisfy demand for both Saturday and Sunday.
Days 4 Weeks ago 3 Weeks ago 2 Weeks ago 1 Weeks ago
Monday 2,200 2,400 2300 2400
Tuesday 2,000 2,100 2200 2200
Wednesday 2,300 2,400 2300 2500
Thursday 1,800 1,900 1800 2000
Friday 1,900 1,800 2100 2000
Saturday
Sunday 2,800 2,700 3000 2900
3.

a. By using least square regression analysis, what would you estimate demand to be for
each month of next year?
b. To be reasonably confident, Nina decide to use three standard errors of estimate for
safety. How many additional units should be held to meet the level of confidence?
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For Chapter 05
1. Three time estimates for each activity of the network are given in the following table. For this
given data:
(a) Draw the network diagram
(b) Find the critical path, and
(c) Find the variance of the CP

2. Given the following network and PERT activity time estimates. Do the following by using the
information from table.
a. Network diagram for an activities
b. Compute the expected activity times and variances
c. Determine the earliest and latest time at each node
d. Identify the critical path and compute expected project completion time
e. Determine the probability that the project will be completed in 28 days or less

3. Consider a small project that involves the following activities.

  Preceding Completion Times (days)
Activity Activity
Optimistic Most Likely Pessimistic

a - 5 6 7

b - 4 5 18

c a 4 15 20

d b,c 3 4 5

e a 5 16 18

i. Determine the expected value and the variance of the completion time for each activity.
ii. Find the critical path by using the expected times from (i).
iii. By assuming that the normal distribution applies, determine the probability that the
critical path will take between 18 and 26 days to complete.
iv. How much time must be allowed to achieve a 90% probability of timely completion?
4.

Activities Immediate predecessor Duration (days)

A ----- 5
B ----- 4
C A 3
D A 4
E A 6
F B,C 4
G D 5
H D,E 6
I F 6
J G,H 4

a. Draw network diagram by using both Activity on arrow (AON) and activity on nod
(AON)
b. Determine ES, EF, LS, and LF by using forward and backward pass
c. Select Critical path, determine project duration and calculate slack if any

5. Consider the network pictured below.

A. Enumerate all paths through this network.
B. Calculate the critical path for the network.
C. What is the minimum duration of the project?
D. How much slack exists at each activity?

6. Costs for a project are $12,000 per week for as long as the project lasts. The project
manager has supplied the cost and time information shown. Use the information to
a) Determine an optimum crashing plan.
b) Summarize the total costs for the plan.
7. Given the following network, determine the first activity to be crashed by the following
priority rules:
(a) Shortest task first
(b) Minimum slack first
(c) Most critical followers
(d) Most successors

8. Using the network on problem 7 and the additional information

below, find:
(a) The crash cost per day
(b) Which activities should be crashed to meet a project deadline of 13 days at minimum
cost. Assume
partial crashing is allowed
 9. Consider the following network for conducting a two week (10 working days) computer
training class:

(a) Construct a schedule showing: ESs for all activities, LSs for all activities, Slacks for all
activities and Critical path
(b) Given the following.

i. Find the crash cost per day.

ii. Which activities should be crashed to meet a project deadline of 10 days with a minimum
cost by
Assume partial crashing?
iii. . Find the new cost.
iv. Is partial crashing an appropriate assumption in this kind of project?
10. Given the following project (all times are in days):

(a) Draw the network and find the critical path, time, and cost for an all-normal level of
project activity.
(b) Calculate the crash cost-per-day (all activities may be partially crashed).
(c) Find the optimal way of getting an 18-day delivery time. What is the project cost?
(d) Find the optimal way of getting a 16-day delivery time. What is the project cost?
(e) Calculate the shortest delivery time for the project.
What is the cost?
For Chapter 06
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4. A car leasing company buys a car from a

wholesaler for $24,000 and leases it to a
customer for four years at $5,000 per year. Since
the maintenance is not included in the lease, the
leasing company has to spend $400 per year in
servicing the car. At the end of the four years, the
leasing company takes back the car and sells it to
a secondhand car dealer for $15,000. For the
moment, construct the cash flow diagram (we
will not consider tax, inflation, and depreciation).

5. Mr. Shop purchases a pizza shop for $120,000. Its

operation will result in a net income of $15,000/Yr for
 the first year, increasing by $2,000 each year after year
1. At the end of the fifth year, the shop is sold for
$155,000. Draw the cash flow diagram for this project.

6. Mr X, Mr Y and Mr Z were asked to consider two

different cash flows: $500 that they could receive today
and $1000 that would be received 3 years from today.
Mr X wanted the $500 today, Mr. Y choose to collect
$1000 in 3 years and Mr Z was indifferent between
these two options. Can you offer an explanation of the
choice made by each?

7. A man went to his bank and borrowed $750. He agreed

to repay the sum at the end of 3 years, together with the
interest at 8% per year. How much will he owe the bank
at the end of 3 years?

8. Compute the following:

a. If $100 at Time “0” will be worth $110 a year hence and was $90 a
year ago, determine the interest rate for the past year and the
interest rate of next year.
b. Assume that $90 invested a year ago will return $110 a year from
now, what is the annual interest rate in this situation?

9. How much must you invest now at 7.9% interest to accumulate

$175,000 in 63 years?
[Link] piece of equipment will cost $150,000 in 5 years. How
much will it cost today using 10% interest?
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