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Tesla engineering center is trying to decide whether to make or buy a part (#T-63NFT) in its transmission module. Purchasing the part would cost $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, Tesla will need 100,000 of these parts. Use decision trees analysis to calculate the expected monetary value (EMV) and make decision. Please draw a decision tree for analysis. What is the cost if Tesla decide to make the part but the part needs to be redesigned? What is the cost if Tesla decide to make the part and the part does not need to be redesigned? What is the EMV if Tesla decide to make the part? What is the EMV if Tesla decide to buy the part? How would the “30% chance for redesign” come from? Please provide your

Tesla engineering center is trying to decide whether to make or buy a part (#T-63NFT) in its transmission module. Purchasing the part would cost $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, Tesla will need 100,000 of these parts. Use decision trees analysis to calculate the expected monetary value (EMV) and make decision. Please draw a decision tree for analysis. What is the cost if Tesla decide to make the part but the part needs to be redesigned? What is the cost if Tesla decide to make the part and the part does not need to be redesigned? What is the EMV if Tesla decide to make the part? What is the EMV if Tesla decide to buy the part? How would the “30% chance for redesign” come from? Please provide your

Practical Management Science
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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Tesla engineering center is trying to decide whether to make or buy a part (#T-63NFT) in its transmission module. Purchasing the part would cost $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, Tesla will need 100,000 of these parts. Use decision trees analysis to calculate the expected monetary value (EMV) and make decision. Please draw a decision tree for analysis.

  • What is the cost if Tesla decide to make the part but the part needs to be redesigned?
  • What is the cost if Tesla decide to make the part and the part does not need to be redesigned?
  • What is the EMV if Tesla decide to make the part?
  • What is the EMV if Tesla decide to buy the part?
  • How would the “30% chance for redesign” come from? Please provide your
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