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:

DemandStaffing OptionsHighMediumLowOwn staff600550350Outside vendor900650450Combination700600400

1. If the demand probabilities are 0.4, 0.25, and 0.35, 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 = $ [fill in the blank]
2. Construct a risk profile for the optimal decision in part (a).

CostProbability [fill in the blank]0.4[fill in the blank]0.25[fill in the blank]0.35 1.0

What is the probability of the cost exceeding $575,000? If required, round your answer to two decimal places. Probability = [fill in the blank]