Assignment 4MGT 251. Planning and Control1) Benefit-cost AnalysisPark Crest Hospital is looking into the possibility of upgrading its patient tracking informationsystem. The current system is a management information system (MIS) that maintains records onthe active status of patients residing in the hospital at a given moment. It ties into patient medicaltreatment files and financial history files. Thus it is possible to determine the current disposition ofpatients residing in the hospital (e.g., room number, telephone number, attending physicians,attending nurses, etc.); to access facts about the patients prior medical history; and to accessfinancial data on current and past charges made to the patient.The current MIS is more than seven years old. In view of changes in information storage andretrieval technology that have recently occurred, as well as the current systems inability to deal withchanges that have been made to handle the patient medical treatment files, Park Crest managementhas decided to upgrade its patient tracking information system. Dr. Ralph Kopecky is made head of atask force to identify possible systems that can replace the existing one.A one-month search unearths two products that are good candidates. Each is an off-theshelf product that will be modified by the vendor to fit into a clients existing environment. Afterlengthy discussions with the vendors, Dr. Kopecky developed the cost and benefit data that appear inthe accompanying exhibit. He will employ these data to educate members of the ExecutiveManagement Committee about costs and benefits associated with the alternative solutions.ItemSystem ASystem BPurchase price2,300,0001,600,0005-year savings compared to using currentsystem4,100,0002,700,000Cost of conversion from old to new system325,000300,000Annual maintenance cost over 5 years(includes salaries of full-time supportpersonnel)275,000200,000Questions:a) Using the data contained in the exhibit, compute the benefit-cost ratios associated with adoptingSystem A and System B.b) Given the data contained in the exhibit, does it make sense from a financial perspective toabandon the current MIS and to adopt a new one? Explain your reasoning.c) Using the data contained in the exhibit, which solution System A or System B is moreattractive from a purely financial point of view? Write up your views in a one-page, single-spacedreport that will be submitted to the Executive Management Committee.1Assignment 4MGT 251. Planning and Controld) What are the limitations of taking a purely financial approach to selecting a product that willenable Park Crest Hospital to meet its business needs? What other factors should be taken intoaccount?2) Schedule-Cost-ResourceThe table below contains cost, resource, and schedule data for a hypothetical project.ItemImmediatepredecessorADuration(weeks)4Number ofresourcesLevel ofeffort*Labor cost Materialcost2 designers@$1,600 per weekper person2 programmers@$1,200 per weekper person1 programmer@$1,200 per weekTotal cost$1,000BA2CA4DB61 testers @ $1,000per week per person$5,000EB,C32 tester @ $1,000per week per person$2,000FD, E32 integrators @$1,800 per week perperson$1,000Total$2,000$2,000$13,000* Level of effort = number of workers x duration of work; e.g., 5 people working 3 days is equal to 15 person-days of effort.Questions:a. Create a network diagram for the tasks listed in the table above.b. Calculate earliest start, latest start, and float for each task.TaskEarlieststart (ES)Lateststart (LS)FloatABCDEFc. Given the information captured in the network diagram, create a Gantt chart for the project.In the Gantt chart, picture weekends. (Assume the project begins on a Tuesday and that aweek of effort is five working days long.)2Assignment 4MGT 251. Planning and Controld. Calculate level of effort, labor costs, and total costs per task and put the values in theappropriate cells in the first table above.e. Assume the company being examined here has only two testers. How will this show up on aresource histogram? How should the work for Tasks D and E be leveled? What, if any, impactwill the resource leveling have on the project duration?3
