Reference no: EM133349254

Question: As chief cargo-door engineer for a major aircraft manufacturer, you are responsible for redesigning the door to prevent further accidents. In order to have the new cargo doors installed as soon as possible, you are considering whether to redesign the door prior to knowing the official findings of the accident investigation team. You do know that the possible causes of failure have been reduced to either a failure in the latch or a failure in the electric motors that close the door. You estimate that there is a 60% probability that a latch failure will be identified as the cause of the accident and a 35% probability that the motors will be blamed. The four options you are considering are (a) redesign the latch now at a cost of $35,000; (b) redesign the motor now at a cost of $30,000; (c) redesign both now at a cost of $25,000; and (d) wait for the results of the accident investigation before deciding which component to redesign.

If you choose either (a) or (b) and the component which you did not redesign is determined to be the cause of failure, it will cost you an additional $30,000 for an accelerated redesign of the latch and an additional $50,000 for an accelerated redesign of the motor. Also, if you choose (d), your design costs are thus associated with an accelerated schedule. Which option has the lowest expected cost?