Business Mathematics Pert/Cost

Harper, W.M.
June 1966
Accountancy;Jun66, Vol. 77 Issue 874, p436
Trade Publication
This article discusses PERT/COST, a method of systematically investigating a network so as to find the most acceptable compromise between shorter project completion times and extra costs. For example, in this case job 7,8 is clearly the first job to be considered, since the whole project can be completed two weeks earlier for a cost of only £10 by reducing the time for this job to its minimum. At first sight it seems that the job time should be reduced to its minimum of three weeks. However, a glance at the network shows that if this job is reduced by more than one week the critical path will be switched from 2,5 to 2,3,5. This introduces another PERT/COST principle: When a job reduction results in the creation of two parallel critical paths, the cost of reducing the project time by one week is the sum of the weekly reduction costs of the parallel jobs. Further reductions along these two parallel paths involving job 5,6 will need a reduction of job 4,7 as well, and since the combined costs of reducing both these is £20+60=£80, it is not warranted. This means that now, if jobs 2,5 and 3,5 are reduced, job 4,7 will also have to be reduced. The combined cost of all three reductions is £120.


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