Futuremart is an international retail store. They are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. 

The current system costs Futuremart $2,500,000 per month and $62 per order. Futuremart has two options, a partially automated B2B and a fully automated B2B system. The partially automated B2B system will have a fixed cost of $7,200,000 per month and a variable cost of $50 per order. The fully automated B2B system has a fixed cost of $11,400,000 per month and $30 per order. 

Based on data from the past two years, Futuremart has determined the following distribution on monthly orders:

Required

1. Prepare a table showing the cost of each plan for each quantity of monthly orders.
2. What is the expected cost of each plan?
3. In addition to the information systems costs, what other factors should Futuremart consider before  deciding to implement a new B2B system?

Transcribed Image Text:

Monthly Number of Orders 400,000 600,000 800,000 Probability 0.35 0.40 0.25