1. Zaman Khan,
11/8/2015
OperationsResearch
BIT Corp
The company I’minventingforthismasteryprojectisaWebDesignandDevelopmentcompany.The
companycan create customwebsitesorwebapplications. The Companyname is BITCorp.
Costs
The company hasfixedandvariable costs.The fixedcostsare rent,3 full-time developersalaries,and
utilities. Variable costsare commissionsonsales.
Expense Local Currencies U.S. Dollars
Rent(U.A.E)- 4166AED permonth 1135
Rent(Pakistan) 10000PKR permonth 95
3 Developer’ssalaries- 90000PKR permonth 857
Utilities(U.A.E)- 1000AED permonth 272
Utilities(Pakistan)- 10000PKR perannum 95
__________
Total Monthly FixedExpenses 2454
Break-evenAnalysis
The average website sellsfor2700AED, or, 735 U.Sdollars.
BIT Corp usesfreelance salesmen,affiliatemarketing,andwordof mouthto sell websites.Inorderto
promote sales,BITCorp paysout 150 dollarscommissionperwebsite sold.BITCorp’sthree full-time
developerscandesignandhandover3 websitesaweek.Assuming4.3weekspermonth,BITCorp can
produce 12.9 websitespermonth.
Break-even= Fixedcosts____ 2454____ = 4.19, or 5 websites.
Unitprice – Variable costs 735 - 150
BIT Corp needstosell anddevelop5websitesamonthto breakeven.At5 sales,BIT Corpwill gross
2925, netprofitwill be 471.
If BIT Corpwere to sell 13 or more orders ina monththeywouldrunbehindschedule due toan inability
to produce 13 or more websitesamonth,andpossiblyincurlate fees,thiswouldcompelthemto
considerhiringmore developers.AnotherwaythatBIT Corpis consideringtocutvariable costsand
increase profitand salesatthe same time isto hire full time salesmen.
DecisionAnalysis

2. BIT Corp isrunningout of referralsandneedstobeginaggressivelypursuingnew business assalesare
beginningtoslump.BITCorpmanagementhasreasontobelieve thereisa50% chance that referrals
mightdiminish from6to 2 websitespermonth.Theyare consideringhiringSalesmen toweatherthe
storm.In past experiences,BITCorpfoundthere were strongsalesmenandweaksalesmen,andthat
theywere indistinguishableduringthe interview process.Because of this,BITCorpisn’tveryconfident
theywill hire agoodsalesman.The likelyhoodthatthe salesmanwill be aggressive(good) is.2.A good
salesmanwill average6websitesamonthsales,andcosts$1000 plus10% of sales,abad salesmenwill
average 2.5 websitesandcosts1000 plus10% of gross sales.ConstructaDecisiontree forBIT Corp.
DecisionTree Analysis
Afteranalyzingthe decisiontree withprobabilitiesitbecomesclearthatBIT Corpshouldcertainlyhire a
salesman.There isonlya40% chance of incurringlosses,inthe circumstance that the referralsdropand
the salesmantheyhire isbad.In the otherthree scenarios,totaling60%, BIT Corp makesmore money
than currently.
CPM/PERT ProjectSchedule
The stepsinvolvedinmanifesting awebsiteare:
Activity(steps) Time/Crash Predecessor Cost Norm/Crash
1. Finalizingdetailswiththe client 2/2 - 25

3. 2. Designingtheme andlayout 2/1 1 45/60
3. Designingfromend 2/2 1 45
4. Designingbackend 3/2 2 60/80
5. Onsite SEO 2/1 3 20/30
6. Trial withclient 2/1 4 25/45
7. Final tweeks 2/1 5,6 50/75
8. Completionandhandover
The critical path is 1, 2, 4, 6, 7.
Normal project completiontime is11 days and costs 270
Activities3 and 5 have 3 days of slack time.
Completelycrashingthe projectwouldcost360 and take 7 dayswiththe same critical path.Only
crashingthe critical path would change the critical path.Activity 5 needstobe crashedto save time.
Aftercrashing5, there are twoCritical paths 1,3,5,7, and 1,2,4,6,7
In doingthisanalysis,Ilearnedthatthere isalsoasort of slacktime incrashingcosts. Althoughone can
crash the entire activity,sometimesactivitiesdon’tneedtobe crashedandthe time will still be
maximallycrashed.Thisendeavorwouldsave money.
Linear Programming Analysis
BIT Corp isnow interestedinofferinganew product/service afterfindinganiche inthe market.A lotof
companiesalreadyhave awebsite buttheyhave adatedlookandare readyto be redesigned.
Redesigningawebsite bringsin1050, buttakesthe graphicsguy15 hoursa weekandthe developers30
hours.Making a website fromscratchbringsin735 andtakesthe graphicsguy5 hours,and the
developers20hours.The graphicsguy works40 hoursa week,and the twodeveloperswork40 hoursa
weekeach.Managementhasdecidedthatatleastone projectperweekshouldbe aredesign.Findthe

4. optimal combinationof productstoincrease revenue.
Summary
Accordingto the LinearProgramminggraph,the solutionthatoptimizesprofitsisproducingone
redesignand3 newwebsites.Isolvedthisequationusingbothmethods;graphical andalgebraically.If
some the constraintswere tochange,for instance if managementdecidedtoscrapthe minimumorone
redesignperweek,the mostprofitableendeavorwouldbe tomake new websitesonly.