Buy P 1-P Low Cost High Cost Purchase Cost C1 = 35,000+ 0.08 x 2,500,000 C2 = 35,000+ 0.12 x 2,500,000 C3 = 200,000

An organization requires 2.5 milion pieces of a specic component. The firm can attempt to make it internally (design and manufacture) of purchase it extemally. MAKE Based on relative frequency analysis with simiar components in the "make" deciaions, the probability P of a part with a low cost C1 is 0.38 . Oehenise, it will cost C2. The low cost C1 is 8 cents per unit. while the higher cost C2 is 12 cents per unit. Both outcomes involve a foxed setup investment of 535,000 . RUY. it they purchase the part, the non-recoverble expenses and variable part costs total $200,000 on the latest vendor quote. The procurement feam must decide between the two decision alternatives. To provide management greater insight, determine the diflecence behween the expected value of Make and Purchase cost decision atemathes (Make minus Buy) instead of fust rendening a Make or Boy final decision. Round your answer to bhe nearest dollar, if applicabie Do not enter the s symbol