Reference no: EM132884693
Vasco da Gama Industries is deciding whether to make or outsource the new batteries that will power its new Hydro Bat-Boat. Guy Josobo is the CEO, and he runs all the production management for the project. He has determined the following costs: Respectively the amounts are $-20,000 (lose money) low, $40,000 medium, and $100,000 high demand to produce at Vasco da Gama. To outsource the project, he has determined the following costs: $10,000 low, $45,000 medium, and $70,000 high demand.Using this information, complete the following steps:
Develop a decision tree or decision-tree chart to solve Guy Josobo's dilemma.
At each decision node, select the best decision alternative for both the manufacture and outsource choices.
Determine the state of probabilities for all the demands: low demand is .30, medium demand is .45, and high demand is .25.
Using your decision tree and states of probabilities, calculate the cost at each outcome node, and determine the best solution.
Show all your work for these steps.
Describe and justify the steps in a decision tree analysis that Guy Josobo performed for Vasco da Gama Industries, and include any possible challenges he will face.
Explain what decision Guy Josobo should make, and explain your reasoning.