1. FX Ltd (FX) has been approached by DB Ltd (DB) with a rush order to purchase several units of a customized version of the "VizKid" audio mixer made by FX. However, there is uncertainty about the number of customized VizKids which will be needed by DB. Specifically, there is a 0.35 probability that DB will need 100 units, and a 0.65 probability that DB will need 50 units. If FX will agree to produce either number of units, then DB will pay, $6,000 per unit if it orders 50 units and $5,000 per unit if it orders 100 units. The electronic modifications of the standard Vizkid needed for this customized version are straightforward, but there will be a fixed cost of $110,000 to design the modifications and set up for assembly of the customized VizKids, regardless of the number of units produced. It will cost $2,000 per unit to manufacture the circuit boards. However, the circuit boards for the customized units will not fit into the standard VizKid case. An appropriate case can be purchased at $500, but FX could instead purchase an injection moulder to make the cases. It will cost $15,000 to purchase the moulder, and there is a 0.7 probability to successfully make the cases using the moulder. If the moulder does not work, then the purchase price for the moulder will be totally lost and FX must still purchase the cases at $500 per case. If the moulder works, then it will cost $50 per case to make the cases using the moulder. Regardless of which case is used, the cost of assembling the VizKid circuit boards into the case is $25 per unit. Unfortunately, there is no way to test the moulder without purchasing it. FX can make a decision about purchasing the injection moulder after it knows exactly how many units DB will order. Assume that there is no other use for the moulder except to make the cases for DB's order. a. Draw a decision tree for FX's decision about whether to accept DB's offer and how to acquire the cases for the customized VizKids. [60 marks] b. Using the expected value as the decision criterion, determine the preferred course of action for FX regarding this order. Show all relevant workings. [40 marks) 1. FX Ltd (FX) has been approached by DB Ltd (DB) with a rush order to purchase several units of a customized version of the "VizKid" audio mixer made by FX. However, there is uncertainty about the number of customized VizKids which will be needed by DB. Specifically, there is a 0.35 probability that DB will need 100 units, and a 0.65 probability that DB will need 50 units. If FX will agree to produce either number of units, then DB will pay, $6,000 per unit if it orders 50 units and $5,000 per unit if it orders 100 units. The electronic modifications of the standard Vizkid needed for this customized version are straightforward, but there will be a fixed cost of $110,000 to design the modifications and set up for assembly of the customized VizKids, regardless of the number of units produced. It will cost $2,000 per unit to manufacture the circuit boards. However, the circuit boards for the customized units will not fit into the standard VizKid case. An appropriate case can be purchased at $500, but FX could instead purchase an injection moulder to make the cases. It will cost $15,000 to purchase the moulder, and there is a 0.7 probability to successfully make the cases using the moulder. If the moulder does not work, then the purchase price for the moulder will be totally lost and FX must still purchase the cases at $500 per case. If the moulder works, then it will cost $50 per case to make the cases using the moulder. Regardless of which case is used, the cost of assembling the VizKid circuit boards into the case is $25 per unit. Unfortunately, there is no way to test the moulder without purchasing it. FX can make a decision about purchasing the injection moulder after it knows exactly how many units DB will order. Assume that there is no other use for the moulder except to make the cases for DB's order. a. Draw a decision tree for FX's decision about whether to accept DB's offer and how to acquire the cases for the customized VizKids. [60 marks] b. Using the expected value as the decision criterion, determine the preferred course of action for FX regarding this order. Show all relevant workings. [40 marks)