Hudson Corporation is considering three options for managing its data processing opera$-$

tion: 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:

a$.$ If the demand probabilities are $0\mathrm{.}2,0\mathrm{.}5,$ and $0\mathrm{.}3,$ which decision alternative will mini$-$

mize the expected cost of the data processing operation? What is the expected annual

cost associated with that recommendation?