A mechanical engineering firm is considering submitting a bid to supply and install the ventilation system for a new transit tunnel. As chief engineer of the company, you estimate that a proposal can be prepared at a cost of $5,000, but that such a bid will have only a 20% chance of being accepted. As an alternative, the company can invest $20,000 on an extensive research study before preparing the proposal. Such a proposal will have a 40% chance of being accepted. If the company does get the job, it can either expand its personnel and staff or subcontract work to other companies. If a major portion of the work is to be performed by subcontractors, it is estimated that there is a probability of 70% and 30% for making a profit of $1.0 million and $2.0 million, respectively. If the work is to be 5 accomplished mostly by expanding staff, there is a probability of 60% and 40% for profits of $0.5 million and $3.0 million, respectively. (a) What should be the optimum strategy for your company? What is the maximum expected profit? (b) If you succeed in bid by preparing a proposal without research, determine the probability of making a profit of $1.0 million and the probability of making a profit of $2.0 million by subcontracting so that the expected value is the same as that by doing the work inhouse. Hint: there are 11 options including doing nothing