An automobile company is investigating the possibility of manufacturing and marketing a new operating system equipped with artificial intelligence for the automobiles of the future. The project requires the purchase of a sophisticated supercomputing center, or the hiring of more engineers, obviously the company reserves the option of not developing the product. The new product may have a favorable or unfavorable reception in the market, with a favorable reception in the market, the estimated sales would reach 50,000 operating systems, on the contrary, if the market reception was not favorable, the estimated sales would be 20,000 operating systems . The selling price of the operating systems is $200 per unit. The cost of the supercomputer center is $2,000,000, while the cost of hiring and training the new engineers is $1,000,000. The projected manufacturing cost is $40 per unit if it is made without the help of the supercomputer center, and $10 if it is made with that help. The probability that the new operating system will receive a favorable reception from the market is 50%.

a) Create the network diagram for the evaluation of this project.

b) Calculate the expected mean value for each company alternative and the expected mean value for the alternative you must choose.

c) What alternative should the company choose?

d) If the supercomputing center costs $3,000,000, would the same decision hold?

e) If the market probabilities change to 20% favorable and 80% unfavorable, is it still profitable to carry out the project?

Hint. First calculate the expected revenue for each market scenario (multiplying the number of OS by the number expected to sell). Then calculate the total manufacturing costs for the options to build the center and hire more engineers for the two market scenarios (multiplying the number of OS by the cost of manufacturing). Calculate the benefits for each alternative (Subtracting the total manufacturing costs and the fixed costs from the income). Finally, calculate the expected mean values.