Kang 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 $600600550$

Outside vendor $850550250$

Combination $750600450$a$)$

If the demand probabilities are $0\mathrm{.}2,0\mathrm{.}5,$ and $0\mathrm{.}3,$ which decision alternative will minimize the expected cost of the data processing operation? What is the expected annual cost associated with that recommendation? $($Enter your answers in dollars.$)$

EV$($Own staff$)=$ $

$585000$

Correct: Your answer is correct.

EV$($Outside vendor$)=$ $

$520000$

Correct: Your answer is correct.

EV$($Combination$)=$ $

$585000$

Correct: Your answer is correct.

The decision alternative that minimizes the expected cost is

hiring an outside vendor

Correct: Your answer is correct.

$.$ The expected annual cost associated with this recommendation is $

$520000$

Correct: Your answer is correct.

$.$

$($b$)$

Construct a risk profile for the optimal decision in part $($a$).($Submit a file with a maximum size of $1$ MB$.)$

No file chosen

This answer has not been graded yet.

What is the probability of the cost exceeding $$750,000?$