Build a decision tree to decide if your project team should develop an application that will allow users to readily access their accounting spreadsheets, or should this effort be outsourced to a contractor? Decision tree is attached.
During the requirements gathering for the project, the requirements were not completed accurately. Therefore, there is a risk that the final product will not pass the customer-acceptance test. Although doing the project in-house will be expensive, the chances of user acceptance are high, thus preventing a costly rework of the project.
1. Use the information in the table below to decide whether you want to build the application in-house
or outsource it.
2. Create a decision tree to show outcomes for each decision node (attached). Attach decision tree as Appendix A.
3. Calculate expected value of each outcome and show your calculations (Probability X Impact).
4. Explain the best option based on the outcome, and why.
Cost to build the application in-house. $125,000
Cost to outsource to a contractor $90,000
Probability of passing the user acceptance test. 85%
Probability of passing the user acceptance test if work is outsourced. 15%
Cost of rework after the user acceptance test if build in-house. $40,000
Cost of rework after the user acceptance test if work is outsourced. $50,000
Your paper should be 2 pages in length, and include a cover page, reference page, and appendix. Include at least three scholarly references (peer-reviewed articles published within the last 5 years, ie www.doi.org articles).
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