Samsung operations manager must determine whether to make or buy a new "heartrate sensor" for its new Galaxy smart watch it's about to produce. One million units are expected to be produced over the...


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Samsung operations manager must determine whether to make or buy a new

Extracted text: Samsung operations manager must determine whether to make or buy a new "heartrate sensor" for its new Galaxy smart watch it's about to produce. One million units are expected to be produced over the life cycle. If the product is made, a start-up cost of $420,000 & a manufacturing cost of $2/sensor. There's a probability of 4 that the product will be satisfactory and a .6 probability that it will not. If the product is not satisfactory, the firm will have to reevaluate the decision. If the decision is reevaluated, the choice will be whether to spend another $500,000 to redesign the sensor or to purchase. Likelihood of success the second time that the make decision is made is .9. If the second make decision also fails, the firm must purchase. Regardless of when the purchase takes place, Samsung's best judgment of cost is that it will pay $.50 for each purchased sensor plus $720,000 in vendor development cost. Total Cost incurred if the company "fails after re- evaluaring the making process" * O $2,140,000 O $4,140,000 $2,104,000 O $1,140,000


Extracted text: "Total Manufacturing Cost" is * $2,000,000 $3,280,875 O $1,808,775 O $2,787,875 Total Cost incurred if the company "succeeds after re-evaluating the making process" * $2,920,000 $7,593,755 $675,375.5 O $2,902,000

Jun 11, 2022
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