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JDI, Inc. is trying to decide whether to make or buy a part (#J-45FPT). Purchasing...

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Accounting

JDI, Inc. is trying to decide whether to make or buy a part

(#J-45FPT). 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,

JDI will need 100,000 of these parts. Using decision trees analysis and EMV,

what should JDI do? Show the decision tree.

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