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Answer/complete both of the following two questions. ________________________________________ Question 1:
Answer/complete both of the following two questions.
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Question 1: Your firm designs training materials for computer training classes, and you have just received a request to bid on a contract to produce a complete set of training manuals for an 8-session class. From previous experience, you know that your firm follows an 80% learning rate. For this contract, it appears that the effort will be substantial, running 200 hours for the first session. Your firm has an average cost of labor of $100/hour and the overhead is expected to run a fixed $500 per session. The customer will pay you a flat fixed rate per session (Per Session Price.) If your profit markup is 10%, what will be the Total Price, the Per Session Price, and at what session will you break even?
Answer the following three questions:
a.What is the Total Price? This is what you would charge the customer so that you can have your profit markup of 15% over all of your costs. To calculate this, first figure out your cost per each session, add them up, and then add your profit.
b.What is the Per Session Price? This is the revenue that the customer pays you each time you complete a session. It is calculated by dividing the Total Price by the number of sessions.
c.What is the Break Even Point? At the beginning, your cost per session is more than your revenue per session. As each session is completed, however, your costs for the session declines so that eventually your cumulative revenue exceeds the cumulative cost. The break-even point is the session at which, for the first time, your revenue exceeds your cost.
Question 2: You have just been assigned as Project Manager (PM) to the Kuraiz-Reconda Fiber Optic Cable (KRFOC) project. You are preparing your cost estimate for the project and your Project Engineer (PE) tells you it will take 300 hours to complete the design effort. Your Finance Manager (FM) tells you that engineering labor is $100 an hour. Fortunately for you, unfortunately for them, you are a graduate of UMUC, specializing in project management in general and advanced project management techniques in particular.
Upon questioning, your PE admits that the 300 hours is just a guess, that under the best circumstances, meaning you quit bugging him with inane questions, it may take only 250 hours. However, it could take as long as 500 hours (if you do not leave him alone to do his job). He stands by his estimate that it will normally take 300 hours. Hint: this is a triangular distribution.
Thinking back to your UMUC days, you wonder if all engineers cost $100 per hour. Upon questioning, your FM admits that this is an average cost, that some are higher, some are lower. You direct him to give you the distribution of all engineer labor rates. With a lot of help (your FM does not have the benefit of your UMUC education), he replies that the labor rate is normally distributed with a mean of $100 and a standard deviation (he is still not sure what that is) of $25.
Please answer the following two questions:
a.Using this information and a wonderful tool you mastered at UMUC, Crystal Ball (CB), what is the mean cost of your engineering effort?
b.You are about to present your cost estimate to your sponsor when you remember that he was once a Professor at UMUC. You recall, too, that he wore both a belt and suspenders and you suspect that this meant he might be a bit conservative. You therefore decide to provide an engineering cost estimate such that you are confident that 90% of the time your actual costs would be less than that value and that no more than 10% of the time would you exceed that value. What is your new estimate of engineering costs?
Be sure to provide the results of your CB simulation.
