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:

Transmitted

The process by which information, traits, diseases, or energy is passed or conveyed from one entity or location to another.

Phenotype

Phenotype refers to the observable physical and physiological traits of an organism, determined by its genetic makeup and environmental influences.

Genotype

The genetic makeup of an individual, consisting of all the DNA sequences that determine hereditary traits.

Biological Inheritance

The process by which genetic information is transmitted from parents to offspring, determining various aspects of the offspring's characteristics.