Question: Please calculate using the same numbers. Ritz Products's materials manager, Tej Dhakar, must determine whether to make or buy a new semiconductor for the wrist
Please calculate using the same numbers.
Ritz Products's materials manager, Tej Dhakar, must 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 milion, of 0.4 that the product will be satisfactory and a 0.6 probability that it will not. If the product is not satisfactory, the firm the dill have to reevalion make decision is made is 0.9. If the second make decision also fails, the firm must purchase. Regardless of when the purchase takes cost is that Ritz will pay $0.50 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? The firm should the semiconductors because this decision has an expected cost of $ (Enter your response as an integer.) b) What criteria did you use to make this decision? In this case, expected monetary value is represented by To make the decision in part (a), we found the of these values. c) What is the worst that can happen to Ritz as a result of this particular decision? What is the best that can happen? The worst that can happen is that the firm spends $ The best that can happens is that the firm only spends $ (Enter your responses as integers.)
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