ITPEC FE Morning October 2018 Question 72
ITPEC FE Morning October 2018 — Question 72 of 80
Development Cost Comparison — Calculate total cost across purchase, outsourcing, and person-month costs for each method.
The overall cost for each development method is: Purchase cost + Outsourcing cost + Person-month cost.
Person-month cost per process:
- Creation: persons × 6 months × $6,000
- Modification: persons × 3 months × $10,000
- Evaluation: persons × 2 months × $10,000
| Method | Purchase | Outsourcing | Person-month | **Total** |
|---|---|---|---|---|
| a) Purchase & modify | 200,000 | 0 | 140,000 | 340,000 |
| b) Outsource batch | 0 | 350,000 | 0 | 350,000 |
| c) Modify in-house | 0 | 0 | 360,000 | 360,000 |
| d) Create new | 0 | 0 | 400,000 | 400,000 |
The correct answer is a) with the lowest total cost of $340,000.
Why not others:
- b) $350,000 — outsourcing cost alone exceeds option a's total
- c) $360,000 — heavy modification staffing (10 persons × 3 months × $10,000 = $300,000)
- d) $400,000 — highest due to 10 persons in creation at 6 months
Key rule: Person-month cost = number of persons × duration (months) × cost rate per person-month. Watch for different rates across processes.
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