Using decision trees analysis and EMV, what should DMR do? Problem #2DMR, Inc. is trying to decide whether to make-or-buy a part(PN14344AR). Purchasing the part would cost them Php 15.00each. If they design and produce it themselves, it will'resultin a per unit cost of Php 7.50. However, the designinvestment would be Php 500,000. Further, they realize thatfor this type of part, there is a 30% chance that the part willneed to be redesigned at an additional cost of Php 500,000.Regardless of whether they make-or-buy the part, DMR willneed 100,000 of these parts. Using decision trees analysis andEMV, what should DMR do?

Decision tree is the tree where in all the alternatives for a project are drawn in the form of…

Answered: Regardless of whether they make-or-buy…

Regardless of whether they make-or-buy the part, DMR will need 100,000 of these parts. Using decision trees analysis and EMV, what should DMR do?

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

Using decision trees analysis and EMV, what should DMR do?

Problem #2
DMR, Inc. is trying to decide whether to make-or-buy a part
(PN14344AR). Purchasing the part would cost them Php 15.00
each. If they design and produce it themselves, it will'result
in a per unit cost of Php 7.50. However, the design
investment would be Php 500,000. 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 Php 500,000.
Regardless of whether they make-or-buy the part, DMR will
need 100,000 of these parts. Using decision trees analysis and
EMV, what should DMR do?

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