You saw in Chapter 10 how to introduce correlation into an @RISK simulation with RISKCORRMAT…

You saw in Chapter 10 how to introduce correlation into an @RISK simulation with RISKCORRMAT functions. We implicitly assumed that the activity durations in Example 15.5 are probabilistically independent. However, it is very possible that some of them would be correlated in a real situation. Specifically, assume activities A and B are positively correlated with correlation 0.7. Also, assume that activities G and J are positively correlated with correlation 0.6. Modify the model appropriately and rerun the simulation. What differences, if any, do you see in the outputs?

Example 15.5


We again analyze the LAN project from Example 15.1, but we now assume that the activity durations are uncertain, with given probability distributions. The company realizes that the actual activity times can vary due to unexpected delays, worker illnesses, and so on. Assuming that the company has a deadline of 60 days, it wants to use simulation to see (1) how long the project is likely to take, (2) how likely it is that the project will be completed by the deadline, and (3) which activities are likely to be critical. Objective To simulate the time to complete the LAN project, and to estimate the probability that any given activity will be part of the critical path.

Example 15.1


An insurance company has decided to construct a local area network (LAN) in one of its large offices so that its employees can share printers, files, and other conveniences. The project consists of 15 activities, labeled A through O, as listed in Table 15.2. This table indicates the immediate predecessors and immediate successors of each activity, along with each activity’s expected duration. (At this point these durations are assumed known.) Note that activity A is the only activity that can start right away, and activity O is the last activity to be completed. This table implies the AON network in Figure 15.2. The company wants to know how long the project will take to complete, and it also wants to know which activities are on the critical path.

Objective To develop a spreadsheet model of the LAN project so that we can calculate the time required to complete the project and identify the critical activities.


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