JDI, Inc Is Trying to Decide Whether to Make-Or-Buy a Part

question 109

Essay

JDI, Inc. is trying to decide whether to make-or-buy a part (#J-45FPT). Purchasing the part would cost them $1.50 each. If they design and produce it themselves, it will result in a per unit cost of $0.75. However, the design investment would be $50,000. Further, they realize that for this type of part, there is a 30% chance that the part will need to be redesigned at an additional cost of $50,000. Regardless of whether they make-or-buy the part, JDI will need 100,000 of these parts. Using decision trees analysis and EMV, what should JDI do?
Show the decision tree.

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Definitions:

Mental Illness

A condition that affects a person's thinking, feeling, behavior, or mood, significantly impacting daily functioning and interaction with others.

Unconventional

Unconventional refers to something that does not follow traditional or expected norms, methods, or practices.

Illogical

Lacking in sound reasoning or coherent argumentation, often leading to conclusions or actions that defy rational thought.

Ambiguous

Open to more than one interpretation or having a double meaning.