JDI,Incis Trying to Decide Whether to Make or Buy a Part

question 120

Essay

JDI,Inc.is trying to decide whether to make or buy a part (#J-45FPT).Purchasing the part would cost $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:

Multi-leaf Spring Pack

A suspension component consisting of several layers of metal springs stacked together to absorb impact.

Multi-leaf Steel Spring Pack

An assembly of layered steel springs used in vehicle suspension systems to provide support, stability, and absorb shocks.

Semi-elliptical

Describes a type of spring or suspension system that utilizes a partial, or half, elliptical shape to absorb shocks.

Centerbolt

A central bolt that is crucial in securing components together, often found in automotive or mechanical assemblies.