Hudson Corporation is considering three options for managing its data processing operation: continuing with its own staff,
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Question:
Hudson Corporation is considering three options for managing its data processing operation: continuing with its own staff, hiring an outside vendor to do the managing referred to as outsourcing or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option in thousands of dollars depends on demand as follows:
Demand
Staffing Options High Medium Low
Own staff
Outside vendor
Combination
If the demand probabilities are and which decision alternative will minimize the expected cost of the data processing operation?
What is the expected annual cost associated with that recommendation? If required, round your answer to the nearest thousand of dollars.
Expected annual cost
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