ITPEC IP October 2020 Question 55

Topic: Project Management

The development of 50 programs is outsourced either to Company A or Company B. Which of the following is the combination of a company with a short development period and a company with a low development cost?

[Assumptions]• Company AProductivity: Creation of one (1) program in two (2) days Cost: 40,000 yen/day• Company BProductivity: Creation of one (1) program in three (3) days Cost: 30,000 yen/day
• One (1) program is created at a time in a sequence
OptionShort development periodLow development cost

Explanation

Company A for both — A finishes sooner and, over the whole job, also costs less despite its higher daily rate.

Programs are created one at a time, so the period is the number of programs times the days per program, and the cost is that period times the daily rate:

CompanyDevelopment periodDevelopment cost
A50 × 2 = 100 days100 × 40000 = 4000000 yen
B50 × 3 = 150 days150 × 30000 = 4500000 yen

Per program, A costs 2 × 40000 = 80000 yen and B 3 × 30000 = 90000 yen, so A is cheaper whatever the number of programs.

Answer (a)

Why not others:

  • •(b) — picks B as cheaper by comparing only the daily rates, 30,000 against 40,000 yen, and ignoring that B needs 50 more days
  • •(c) — reverses both: B takes 50 days longer and costs 500,000 yen more
  • •(d) — B is cheaper per day but slower, so it is neither faster nor cheaper overall

Key rule: Compare total cost, not the daily rate: cost = days needed × rate per day, so a faster supplier with a higher rate can still be cheaper overall.

Project Management · AI-written, may contain errors

Practice this exam

This question comes from an official ITPEC past paper. ITPEC Practice is an independent study tool and is not affiliated with ITPEC. See the official IP past-paper collection or Report an issue.