Question

Data Mning is a company that produces and designs data analysis softwares for various large business corporations. Due to strong growth in Data Science and Big Data ​company’s staffs are overloaded with design and development of new softwares. A new project is due in

99

months. The penalty for completing the project late is

​$13 comma 00013,000

per​ month, since any delay will cause the customers​ (client corporations) significant revenue loss. If Data Mining uses its own software engineers it will cost them

​$10 comma 00010,000

per month​ (wages and​ overhead), including late​ months, to complete the project. Data Mining is also considering having an outside firm complete the project. A bid of

​$82 comma 00082,000

has been received for the completed project. Third option for completing the project is to conduct a joint project by having a third software company complete all statistical analytics components of the project at a cost of

​$52 comma 00052,000.

Data Mining would then complete the rest of the project at an estimated cost of

​$32 comma 00032,000.

They have estimated the following probabilities of completing the project within various time frames when using each of the three options. The estimates are shown in the following table​ below:

Probability of Completing the Project
Option	On Time	One month late	Two months late	Three months late
Internal Engineers	0.30.3	0.50.5	0.20.2	long dash—
External Firm	0.20.2	0.40.4	0.30.3	0.10.1
Joint Project Design	0.10.1	0.40.4	0.30.3	0.20.2

The expected monetary value using internal software workers to complete the project is

​$nothing.

​(Enter

your response as an

integer.​)

The expected monetary value using an outside​ (extrenal) firm to complete the project is

​$nothing.

​(Enter

your response as an

integer.​)

The expected monetary value of conducting a joint project design is

​$nothing.

​(Enter

your response as an

integer.​)

What is the best decision based on an expected monetary value​ criterion?

Joint designJoint design

External engineering firm External engineering firm

Internal engineers

Answer 1