Just BRIEFLY explain b & c for b:elaborate/explain the criteria used.for c:elaborate why it is labeled "worst" and "best" case scenario • • 5.24determine whether to make or buy a new semiconductor for thewrist TV that the firm is about to produce. One million unitsare expected to be produced over the life cycle. If the product ismade, start-up and production costs of the make decision total$1 million, with a probability of .4 that the product will be sat-isfactory and a .6 probability that it will not. If the product isnot satisfactory, the firm will have to reevaluate the decision. Ifthe decision is reevaluated, the choice will be whether to spendanother $1 million to redesign the semiconductor or to purchase.Ritz Products's materials manager, Tej Dhakar, mustLikelihood of success the second time that the make decision ismade is .9. If the second make decision also fails, the firm mustpurchase. Regardless of when the purchase takes place, Dhakar'sbest judgment of cost is that Ritz will pay $.50 for each purchasedsemiconductor plus $1 million in vendor development cost.a) Assuming that Ritz must have the semiconductor (stopping ordoing without is not a viable option), what is the best decision?b) What criteria did you use to make this decision?c) What is the worst that can happen to Ritz as a result of thisparticular decision? What is the best that can happen? PX

A firm or a producer is always a profit maximizer. Therefore they tend to reduce their spending on…

a) Assuming that Ritz must have the semiconductor (stopping or doing without is not a viable option), what is the best decision? b) What criteria did you use to make this decision? c) What is the worst that can happen to Ritz as a result of this particular decision? What is the best that can happen? PX

a) Assuming that Ritz must have the semiconductor (stopping or doing without is not a viable option), what is the best decision? b) What criteria did you use to make this decision? c) What is the worst that can happen to Ritz as a result of this particular decision? What is the best that can happen? PX

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Just BRIEFLY explain b & c

for b:

elaborate/explain the criteria used.

for c:

elaborate why it is labeled "worst" and "best" case scenario

• • 5.24
determine whether to make or buy a new semiconductor for the
wrist TV that the firm is about to produce. One million units
are expected to be produced over the life cycle. If the product is
made, start-up and production costs of the make decision total
$1 million, with a probability of .4 that the product will be sat-
isfactory and a .6 probability that it will not. If the product is
not satisfactory, the firm will have to reevaluate the decision. If
the decision is reevaluated, the choice will be whether to spend
another $1 million to redesign the semiconductor or to purchase.
Ritz Products's materials manager, Tej Dhakar, must
Likelihood of success the second time that the make decision is
made is .9. If the second make decision also fails, the firm must
purchase. Regardless of when the purchase takes place, Dhakar's
best judgment of cost is that Ritz will pay $.50 for each purchased
semiconductor plus $1 million in vendor development cost.
a) Assuming that Ritz must have the semiconductor (stopping or
doing without is not a viable option), what is the best decision?
b) What criteria did you use to make this decision?
c) What is the worst that can happen to Ritz as a result of this
particular decision? What is the best that can happen? PX

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