A Company Is Deciding If It Should Do Design of a Product

question 101

Essay

A company is deciding if it should do design of a product in-house or outsource the design. If outsourced the cost for a low bidder would be $40,000 and the cost for an expensive bidder $100,000. To do the design in-house would require over-time for an already stretched design team with total costs of $70,000. If all three designs (in-house, low bid, high bid) are equal in quality and the likelihood of finding a low bidder is 60% (meaning that 40% of the time the firm will have to hire the expensive bidder), should the company outsource design or do it in-house?

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Definitions:

Data Mining

The process of analyzing large datasets to discover patterns, trends, and relationships that can inform decision making or predict future outcomes.

Data Mining

The process of discovering patterns, anomalies, and correlations within large data sets to predict outcomes, using a variety of techniques including machine learning, statistics, and database systems.

Analytics

The systematic computational analysis of data or statistics.

Aggregating

The process of combining multiple pieces of data together to form a summary or a whole.