Question
2. The IT department has three options to change its staffing. It can (a) continue with internal staffing alone, (b) outsource the department to
2. The IT department has three options to change its staffing. It can (a) continue with internal staffing alone, (b) outsource the department to an external IT company, or (c) combine internal staffing with contract personnel. The cost of the operation depends on the number of requests for IT services. The following COST TABLE has been created by the department. a) Construct a decision tree for this problem. b) If the demand probabilities are 0.2, 0.5, and 0.3 for high, medium, and low, respectively, which decision alternative will minimize the expected cost of the IT operation? What is the expected annual cost associated with that recommendation? Decision Alternative Requests for IT Services (Demand) High Medium Low Use own staff only $650 $650 $600 Outsource $900 $600 $300 Hire supplemental $800 $650 $500 contractors
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