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:

Preconventional Level

A stage in Kohlberg's theory of moral development where moral reasoning is based on external rewards and punishments.

Kohlberg

A psychologist best known for his theory of stages of moral development, which outlines how people progress in their understanding and application of moral principles.

Moral Development

The growth of an individual's understanding of the principles of right and wrong, influencing their behavior and interactions with others.

Self-Protection

Behaviors or strategies adopted by individuals to safeguard their physical and psychological well-being from perceived threats.