Your company is considering whether it should tender for two contracts $($MS$1$ and MS$2)$ on offer from a government department for the supply of certain components. The company has three options:

tender for MS$1$ only; or

tender for MS$2$ only; or

tender for both MS$1$ and MS$2.$

If tenders are to be submitted the company will incur additional costs. These costs will have to be entirely recouped from the contract price. The risk, of course, is that if a tender is unsuccessful the company will have made a loss.

The cost of tendering for contract MS$1$ only is $50,000.$ The component supply cost if the tender is successful would be $18,000.$

The cost of tendering for contract MS$2$ only is $14,000.$ The component supply cost if the tender is successful would be $12,000.$

The cost of tendering for both contract MS$1$ and contract MS$2$ is $55,000.$ The component supply cost if the tender is successful would be $24,000.$

For each contract, possible tender prices have been determined. In addition, subjective assessments have been made of the probability of getting the contract with a particular tender price as shown below. Note here that the company can only submit one tender and cannot, for example, submit two tenders $($at different prices$)$ for the same contract.

$\backslash$table$[[$Option$,\backslash$table$[[$Possible$],[$Tender Prices$]],\backslash$table$[[$Probability of$],[$getting Contract$]]],[$MS$1$ Only,$130,000,0\mathrm{.}2],[115,000,0\mathrm{.}85],[$MS$2$ Only,$70,000,0\mathrm{.}15],[65,000,0\mathrm{.}8],[60,000,0\mathrm{.}95],[\backslash$table$[[$MS$1$ and$],[$MS$2]],190,000,0\mathrm{.}05],[140,000,0\mathrm{.}65]]$