4

Question 1

What is a critical path analysis

Answer 1

Working out the most efficient way to complete a project

Question 2

What is the critical path

Answer 2

The time required to finish all activities in a project

Question 3

Draw a node (for a critical path analysis)

Answer 3

Activity number on left side
Earliest starting time upper right
Latest finishing time lower right
Letter between nodes shows activity
Number between nodes shows duration

Question 4

How to calculate flexibility of an activity on a critical path analysis

Answer 4

(Latest finishing time - earliest starting time) - duration of activity

Question 5

If the flexibility is 0 what does this mean

Answer 5

The activity has no flexibility

Question 6

What makes up the critical path

Answer 6

The activities with no flexibility

Question 7

Advantages of critical path analysis

Answer 7

• Reduces risk and cost

- Can spot flexibility

Question 8

Disadvantages of critical path analysis

Answer 8

• Based on estimates

- Resources May not be flexible (eg labour)

Question 9

What is a Gantt chart

Answer 9

Chart with a series of horizontal lines showing different projects over a period of time

Question 10

What does PERT stand for

Answer 10

Programme
Evaluation
Review
Technique

Question 11

What does PERT do

Answer 11

Help to predict the amount of time a project will take

Question 12

Formula for PERT

Answer 12

Optimistic time + (4xlikely time) + pessimistic time / 6

Question 13

What is productivity

Answer 13

Measuring the output per unit of input

Question 14

What is economies of scale

Answer 14

Unit costs fall as quantity increases

Question 15

What are fixed costs

Answer 15

Costs that don’t change as output does

Question 16

What are fixed costs also known as

Answer 16

Indirect costs

Question 17

What are the types of economies of scale

Answer 17

Purchasing
Production/technology
Marketing
Managerial
Financial
Risk bearing

Question 18

What is purchasing EOS

Answer 18

Lower unit costs for buying in higher quantity

Question 19

What is production/technology EOS

Answer 19

Spreading cost of production over more output

Question 20

What is marketing EOS

Answer 20

Spreading cost of promotion of larger output, eg by using brand name

Question 21

What is managerial EOS

Answer 21

Ability to employ best specialist managers

Question 22

What is financial EOS

Answer 22

Ease of borrowing at low interest rates

Question 23

What is risk bearing EOS

Answer 23

Spreading risk over range of products/assets etc

Question 24

What is diseconomies of scale

Answer 24

Average costs rise as output does

Eg communication issues, lack of customer service

Question 25

What is external EOS

Answer 25

Costs fall within an industry

Eg infrastructure

Question 26

What is meant by breaking even

Answer 26

When revenue covers total costs

Question 27

What are the 3 lines on a break even graph

Answer 27

Total revenue
Fixed costs
Total costs

Question 28

What is the margin of safety

Answer 28

The difference between output and the break even point

Question 29

What is the formula to work out break even point

Answer 29

Fixed costs/contribution

Question 30

What is contribution ( when working out break even)

Answer 30

Selling price - variable costs

Question 31

How is break even useful

Answer 31

• Set targets

- Justify loans

Question 32

What are limitations of break even

Answer 32

• Estimation of figures

- Assumption that all products are sold at full price