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:

Proton Gradient

A gradient of hydrogen ions across a membrane, often used in the process of generating ATP in cells, particularly within the mitochondria during cellular respiration.

Aerobic Respiration

A metabolic process that converts oxygen and glucose into energy in the form of ATP, water, and carbon dioxide, taking place in the mitochondria.

Lactate Fermentation

An anaerobic metabolic process by which glucose or other six-carbon sugars are converted into cellular energy and the metabolite lactate.

Aerobic Respiration

The metabolic process in which cells convert glucose and oxygen into energy, carbon dioxide, and water.