ion Question 5 20 pts (TCO B) The SuperFlyer Corporation is developing a revolut

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Question 5 20 pts

(TCO B) The SuperFlyer Corporation is developing a revolutionary flying disc. The new toy can fly straight over a great distance, which is exciting by itself. However, this disc will also return to the owner in response to his or her voice! Because this is an advance over anything that this company has done before, estimating the amount and cost of the hi-tech materials is difficult. The project manager recommends using a range estimating process to develop an estimate. The values below are submitted by the project team.

Current estimates for cost of material are as follows.

Current estimates for total material requirements are as follows.

(a) What is the expected price of the material per pound?
(b) What is the expected amount of material needed for 100 units?
(c) What is the expected cost for 100 units?

Optimistic cost of smart resin: $5.00 per lb Most likely cost of smart resin: $6.00 per lb Pessimistic cost of smart resin: $7.50 per lb

Explanation / Answer

To be calculated:

(a) Expected price of the material

(b) Expected amount of material

(c) Expected cost for 100 units

Solution:

(a) The expected price of the material per pound is calculated as below:

Expected price = (a + 4m + b) / 6

where,

a = Optimistic cost

m = Most likely cost

b = Pessimistic cost

Putting the given values in the above formula, we get;

Expected price = [5 + (4 x 6) + 7.50] / 6 = 6.08

The expected price of the material per pound is $6.08 per lb

(b) The expected amount of material needed for 100 units is calculated as below:

Expected quantity = (a + 4m + b) / 6

where,

a = Optimistic quantity

m = Most likely quantity

b = Pessimistic quantity

Putting the given values in the above formula, we get;

Expected quantity = [20 + (4 x 25) + 35] / 6 = 25.83

The expected amount of material needed for 100 units is 25.83 lb / 100 units

(c) The expected cost for 100 units is calculated as;

Expected cost = Expected price of material per pound x Expected quantity of material for 100 units

Expected cost = $6.08 x 25.83

Expected cost = $157.05

The expected cost for 100 units is $157.05

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