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JDI, Inc. is trying to decide whether ro make-or-buy a part (#J-45FPT). Purchasing the part would cost them $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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After a trial run on this machine, C-Spec has decided that the machine has a sample mean of 4.001 inches with a standard deviation of 0.002 inch. Should C-Spec use this machine to produce this part. Why.
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