Zen product wants to decide whether to make-or buy an accessory item for one of ther products. It is projected that this item will sell for 515 each If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost. Process B requees only a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50% chance that they will sell 0.000 units, and a 50% chance that they will sell 100,000 units Draw the decision tree approptiate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice? Zen product wants to decide whether to make-or buy an accessory item for one of ther products. It is projected that this item will sell for 515each If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, dhey havetwo choices Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost Process B requaesonly a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50%chance that they will sell (9.000 units, and a 50% chance that they will sell 100,000 units Draw the decision tree approprate to thealternatives and outcomes stated. Using decsion trees and EMV, what is their best choice?

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Answered: Zen product wants to decide whether to…

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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Zen product wants to decide whether to make-or buy an accessory item for one of ther products. It is projected that this item will sell for 515 each If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost. Process B requees only a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50% chance that they will sell 0.000 units, and a 50% chance that they will sell 100,000 units Draw the decision tree approptiate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice?