Innovative new food processor

Reference no: EM13995697

Johnson Marketing is interested in producing and selling an innovative new food processor. The decision they face is the typical "make or buy" decision often faced by manufacturers. On one hand, Johnson could produce the processor itself, subcontracting different sub- assemblies, such as the motor or the housing. Cost estimates in this case are as follows:

Alternative: Make Food Processor

Cost Per Unit ($) 35.00	Chance (%) 25
42.50	25
45.00	37
49.00	13

The company also could have the entire machine made by a subcontractor. The subcon- tractor, however, faces similar uncertainties regarding the costs and has provided Johnson Marketing with the following schedule of costs and chances:

Alternative: Buy Food Processor

Cost Per Unit ($) 37.00	Chance (%) 10
43.00	40
46,00	30
50.00	20

If Johnson Marketing wants to minimize its expected cost of production in this case, should it make or buy? Construct cumulative risk profiles to support your recommenda- tion. (Hint: Use care when interpreting the graph!)

Reference no: EM13995697

Questions Cloud

Calculate the rates separately for the 3 years of follow-up : s it appropriate to report an overall 3-year death rate for this study? Why or why not?

What is the final pressure of the gas : A 2.00 mol sample of a diatomic ideal gas expands slowly and adiabatically from a pressure of 5.056 x 105 pascals and a volume of 12.0 L to a final volume of 30 L. What is the final pressure of the gas?

Problem regarding the decision-analysis course : There are so many issues to think about, however, that he has a difficult time keep ing them all straight. After hearing about your decision-analysis course, he asks you whether you have learned anything that might help him in his decision. What k..

Find the forces that the walls a and b exert on the beam : A 20.0-m -long uniform beam weighing 640 N rests on walls A and B. Find the forces that the walls A and B exert on the beam when the person is standing at a point 3.3 m to the right of B.

Innovative new food processor : Johnson Marketing is interested in producing and selling an innovative new food processor. The decision they face is the typical "make or buy" decision often faced by manufacturers. On one hand, Johnson could produce the processor itself, subcontr..

Prepare the appropriate journal entry for each transaction : Prepare the appropriate journal entry for each transaction or event during 2011, including the closing entry to income summary for the year.

Cumulative risk profiles for the three alternatives : Construct cumulative risk profiles for the three alternatives, assuming Apricot has a 25% chance of winning the lawsuit. Can you draw any conclusions?

What is the probability that exactly one is being deceptive : A federal report find that a lie detector test given to truthful persons have a probability of 0.2 of suggesting that the person is deceptive. What is the probability that exactly one is being deceptive

Calculate the altitude h of the satellite : Consiter the satellite in geostationary orbit at a constant speed. Is it accelerating? If YES, calculate the geostationary satellite in magnitude of the acceleration.

User Account

All Pages