# MB0048 : Compare and contrast CPM and PERT. Under what conditions would you recommend scheduling by PERT? Justify your answer with reasons.

Posted October 20, 2011

on:**MB0048 : Compare and contrast CPM and PERT. Under what conditions would you recommend scheduling by PERT? Justify your answer with reasons. **

**Answer** :- Project management has evolved as a new field with the development of two analytic techniques for planning, scheduling and controlling projects. These are the Critical Path Method (CPM) and the Project Evaluation and Review Technique (PERT). PERT and CPM are basically time-oriented methods in the sense that they both lead to the determination of a time schedule.

**Basic Difference between PERT and CPM**

Though there are no essential differences between PERT and CPM as both of them share in common the determination of a critical path. Both are based on the network representation of activities and their scheduling that determines the most critical activities to be controlled so as to meet the completion date of the project.

**PERT**

Some key points about PERT are as follows:

- PERT was developed in connection with an R&D work. Therefore, it had to cope with the uncertainties that are associated with R&D activities. In PERT, the total project duration is regarded as a random variable. Therefore, associated probabilities are calculated so as to characterise it.
- It is an event-oriented network because in the analysis of a network, emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task.
- PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain.
- It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project.

** **

**CPM**

- CPM was developed in connection with a construction project, which consisted of routine tasks whose resource requirements and duration were known with certainty. Therefore, it is basically deterministic.
- CPM is suitable for establishing a trade-off for optimum balancing between schedule time and cost of the project.
- CPM is used for projects involving activities of repetitive nature.

**PROJECT SCHEDULING BY PERT-CPM**

It consists of three basic phases: planning, scheduling and controlling.

**Phases of PERT-CPM**

1.** Project Planning: **In the project planning phase, you need to perform the following activities:

**Identify**various tasks or work elements to be performed in the project.**Determine**requirement of resources, such as men, materials, and machines, for carrying out activities listed above.**Estimate**costs and time for various activities.**Specify**the inter-relationship among various activities.**Develop**a network diagram showing the sequential inter-relationships between the various activities.

2. **Project Scheduling: **Once the planning phase is over, scheduling of the project is when each of the activities required to be performed, is taken up. The various steps involved during this phase are listed below:

- Estimate the durations of activities. Take into account the resources required for these execution in the most economic manner.
- Based on the above time estimates, prepare a time chart showing the start and finish times for each activity. Use the time chart for the following exercises.

ü To calculate the total project duration by applying network analysis techniques, such as forward (backward) pass and floats calculation

ü To identify the critical path

ü To carry out resource smoothing (or levelling) exercises for critical or scarce resources including re-costing of the schedule taking into account resource constraints

3. **Project Control:** Project control refers to comparing the actual progress against the estimated schedule. If significant differences are observed then you need to re-schedule the project to update or revise the uncompleted part of the project.

** **

### 12 Responses to "MB0048 : Compare and contrast CPM and PERT. Under what conditions would you recommend scheduling by PERT? Justify your answer with reasons."

Thanks nikaht for updating the answers can u please provide the answer 6 for operation research which is Transportation problem of assignment 1 MB0048

Thanks nikaht for updating the answers can u please provide the answer 6 for operation research which is Transportation problem of assignment 1 MB0048. A million thanks

Regards,

Shailaja

Dear Nikhat

Pls Help me for my Assignment i want MB0045 and MB0048 Answers

The Question is given below

MB0048 only Question Number 5 and 6 in SET 1 and 2

Winter / November 2011

Master of Business Administration

Semester II

MB0045 – Financial Management – 4 Credits

(Book ID: B1134)

Assignment

Set- 1 (60 Marks)

Note: Each Question carries 10 marks. Answer all the questions.

Q1. Explain the steps involved in Financial Planning

Q2. A company is considering a capital project with the following information:

The cost of the project is Rs.200 million, which consists of Rs. 150 million in plant a

machinery and Rs.50 million on net working capital. The entire outlay will be incurred

in the beginning. The life of the project is expected to be 5 years. At the end of 5 years,

the fixed assets will fetch a net salvage value of Rs. 48 million ad the net working capital

will be liquidated at par. The project will increase revenues of the firm by Rs. 250

million per year. The increase in costs will be Rs.100 million per year. The depreciation

rate applicable will be 25% as per written down value method. The tax rate is 30%. If

the cost of capital is 10% what is the net present value of the project.

Q3. Discuss the relevance and factors that influence the determination of stock level.

Q4. There was a replacement of its existing machine by a new machine. The new

machine will cost Rs 2,00,000 and have a life of five years. The new machine will yield

annual cash revenue of Rs 2,50,000 and incur annual cash expenses of Rs 1,30,000. The

estimated salvage of the new machine at the end of its economic life is Rs 8,000. The

existing machine has a book value of Rs 40,000 and can be sold for Rs 20,000. The

existing machine, if used for the next five years is expected to generate annual cash

revenue of Rs 2,00,000 and to involve annual cash expenses of Rs 1,40,000. If sold after

five years, the salvage value of the existing machine will be negligible.

The company pays tax at 40%. It writes off depreciation at 30% on the written down

value. The company’s cost of capital is 20%

Compute the incremental cash flows of replacement decisions.

Winter / November 2011

Hint : unit 8 solved problem

Q5. Explicit cost and Implicit cost are the two dimensions of cost. What role does cost

play in financial decisions

Q6. The following details have been extracted from the books of Ashraya Ltd

Income Statement (Rs. In millions)

2009 2010

Sales less returns 1200 1000

Gross Profit 300 520

Selling Expenses 100 120

Administration 40 45

Deprecation 60 75

Operating Profit 100 280

Non operating income 20 40

EBIT (Earnings before interest & Tax 120 320

Interest 15 18

Profit before tax 105 302

Tax 30 100

Profit after tax 75 202

Dividend 38 100

Retained earnings 37 102

Hint: unit 2 worked example

Winter / November 2011

Master of Business Administration

Semester II

MB0045 – Financial Management – 4 Credits

(Book ID: B1134)

Assignment

Set- 2 (60 Marks)

Note: Each Question carries 10 marks. Answer all the questions.

Q1. Examine the importance of capital budgeting

Q2 Considering the following information, what is the price of the share as per Gordon’s

Model?

Net sales Rs. 120 lakhs

Net profit margin 12.5%

Outstanding preference shares Rs. 50 lakhs @ 12% dividend

No. of equity shares 250000

Cost of equity shares 12%

Retention ratio 40%

ROI 16%

Hint: Apply the Gordon formula

Q3. Internal capital rationing is uses by firms for exercising financial control” How does

a firm achieve this ?

Q4. A company has two mutually exclusive projects under consideration viz project A &

project B.

Each project requires an initial cash outlay of Rs. 3,00,000 and has an effective life of 10

years. The company’s cost of capital is 12%. The following fore cast of cash flows are

made by the management.

Winter / November 2011

Economic Project A Project B

Environment Annual cash

inflows

Annual cash in flows

Pessimistic 65,000 25,000

Expected 75,000 75,000

Optimistic 90,000 1,00,000

What is the NPV of the project?

Which project should the management consider?

Given PVIFA = 5.650 Unit 9 worked example

Q5. Explain various types of bonds.

Q6. Given the following information, what will be the price per share using the Walter model.

Earnings per share Rs. 40

Rate of return on investments 18%

Rate of return required by shareholders 12%

Payout ratio being 40%, 50%, or 60%.

And MB0048 Only Few Questions

5. Use Two-Phase simplex method to solve: [10 Marks]

Minimize z= + +

Subject to constraints: – + =5

– ≤ 3

+ ≥ 4

≥ 0, ≥ 0 and is unrestricted.

November / Winter 2011

6. Use Branch and Bound method to solve the following L.P.P: [10 Marks]

Maximize z= 7 + 9

Subject to constraints: – + 3 ≤6

7 + ≤ 35

≤ 7

, ≥ 0 and are integers.

5. Consider the following transportation problem:

Godowns

Factory 1 2 3 4 5 6 Stock

available

A 7 5 7 7 5 3 60

B 9 11 6 11 – 5 20

C 11 10 6 2 2 8 90

D 9 10 9 6 9 12 50

Demand 60 20 40 20 40 40

It is not possible to transport any quantity from factory B to Godown 5.

Determine:

(a) Initial solution by Vogel’s approximation method.

(b) Optimum basic feasible solution.

6. A machine operator processes five types of items on his machine each week, and

must choose a sequence for them. The set-up cost per change depends on the item

presently on the machine and the set-up to be made according to the following table:

From Item To item

A B C D E

A ∞ 4 7 3 4

B 4 ∞ 6 3 4

C 7 6 ∞ 7 5

D 3 3 7 ∞ 7

E 4 4 5 7 ∞

If he processes each type of item once and only once each week, how should he

sequence the items on his machine in order to minimize the total set-up cost?

(Hint: A-> E -> C-> B-> D-> A Cost: 20)

Pls Help me for my Assignment i want MB0045 and MB0048 Answers

The Question is given below

Q4. There was a replacement of its existing machine by a new machine. The new

machine will cost Rs 2,00,000 and have a life of five years. The new machine will yield

annual cash revenue of Rs 2,50,000 and incur annual cash expenses of Rs 1,30,000. The

estimated salvage of the new machine at the end of its economic life is Rs 8,000. The

existing machine has a book value of Rs 40,000 and can be sold for Rs 20,000. The

existing machine, if used for the next five years is expected to generate annual cash

revenue of Rs 2,00,000 and to involve annual cash expenses of Rs 1,40,000. If sold after

five years, the salvage value of the existing machine will be negligible.

The company pays tax at 40%. It writes off depreciation at 30% on the written down

value. The company’s cost of capital is 20%

Compute the incremental cash flows of replacement decisions.

Q6. The following details have been extracted from the books of Ashraya Ltd

Income Statement (Rs. In millions)

2009 2010

Sales less returns 1200 1000

Gross Profit 300 520

Selling Expenses 100 120

Administration 40 45

Deprecation 60 75

Operating Profit 100 280

Non operating income 20 40

EBIT (Earnings before interest & Tax 120 320

Interest 15 18

Profit before tax 105 302

Tax 30 100

Profit after tax 75 202

Dividend 38 100

Retained earnings 37 102

Hint: unit 2 worked example

set 2

Q2 Considering the following information, what is the price of the share as per Gordon’s

Model?

Net sales Rs. 120 lakhs

Net profit margin 12.5%

Outstanding preference shares Rs. 50 lakhs @ 12% dividend

No. of equity shares 250000

Cost of equity shares 12%

Retention ratio 40%

ROI 16%

Hint: Apply the Gordon formula

And MB0048 Only Few Questions

5. Use Two-Phase simplex method to solve: [10 Marks]

Minimize z= + +

Subject to constraints: – + =5

– ≤ 3

+ ≥ 4

≥ 0, ≥ 0 and is unrestricted.

November / Winter 2011

6. Use Branch and Bound method to solve the following L.P.P: [10 Marks]

Maximize z= 7 + 9

Subject to constraints: – + 3 ≤6

7 + ≤ 35

≤ 7

, ≥ 0 and are integers.

set 2

5. Consider the following transportation problem:

Godowns

Factory 1 2 3 4 5 6 Stock

available

A 7 5 7 7 5 3 60

B 9 11 6 11 – 5 20

C 11 10 6 2 2 8 90

D 9 10 9 6 9 12 50

Demand 60 20 40 20 40 40

It is not possible to transport any quantity from factory B to Godown 5.

Determine:

(a) Initial solution by Vogel’s approximation method.

(b) Optimum basic feasible solution.

6. A machine operator processes five types of items on his machine each week, and

must choose a sequence for them. The set-up cost per change depends on the item

presently on the machine and the set-up to be made according to the following table:

From Item To item

A B C D E

A ∞ 4 7 3 4

B 4 ∞ 6 3 4

C 7 6 ∞ 7 5

D 3 3 7 ∞ 7

E 4 4 5 7 ∞

If he processes each type of item once and only once each week, how should he

sequence the items on his machine in order to minimize the total set-up cost?

(Hint: A-> E -> C-> B-> D-> A Cost: 20)

hi..

Plz send all the answers of mb0048 and mb0049 smu mba sem2 winter 2011 ….it will be a grt help

thank you

hi..

Plz send all the answers of mb0048 and mb0049 smu mba sem2 winter 2011 ….it will be a grt help

thank you

Dear……

Please send me the solutions for Assignments for MB0045 & MB0048 (Sem-II).Winter / November 2011

Thanks & regards,

Mahesh

can you help me to solve this?

Use Branch and Bound technique to solve the following problem

Maximise z = 3×1 + 3×2 + 13 x3

Subject to

– 3×1 + 6×2 + 7×3 ≤ 8

6×1 – 3×2 + 7×3 ≤ 8

0 ≤ xj ≤ 5

And xj are integer j = 1, 2, 3

1 | Sathish

October 20, 2011 at 9:46 am

Hi Nikaht, Thanks a lot, you were so helpful….you know I’m lil greedy, can you please help me with assignments for:

MB0038

MB0039

MB0040

MB0041

MB0042

MB0043

Thanks a ton,

Sathish

Mamta

February 29, 2012 at 5:02 am

Dear……

Please send me the solutions for Assignments for MB0045 & MB0048 (Sem-II).Winter / November 2011

Thanks & regards,

Mamta