Hudson Corporation is considering three options for managing its data warehouse: 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 650 650 600
Outside vendor 900 600 300
Combination 800 650 500

Required:
a. If the demand probabilities for high, medium, and low are 0.2, 0.5, and 0.3, respectively, which decision alternative will minimize the expected cost of the data warehouse.
b. Construct a risk profile for the optimal decision in part (a).