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nama34
nama34
25.02.2020 • 
Business

A Business is trying to decide whether to make or buy a certain part.Regardless of whether they make or buy the part, the business will need 100,000 of these parts.Purchasing the part from an outside vendor would cost $1.70 each. If the company designs andmanufactures the part itself, then it costs the company $0.95 per unit. The production of part by thebusiness would require a onetime investment of $65,000. Further, it is realized that for this type of part,there is a 25% chance that the parts will need to be redesigned at an additional cost of $50,000 (toredesign all the parts). Use decision tree analysis and EMVs to determine the optimum decision for thebusiness.

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