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De Leon Engineering designs and constructs air conditioning and heating ( HVAC ) systems for hospitals and clinics. Currently the company's staff is overloaded with
De Leon Engineering designs and constructs air conditioning and heating HVAC systems for hospitals and clinics. Currently the company's staff is overloaded with design work. There is a major design project due in weeks. The penalty for completing the design late is $ per week, since any delay will cause the facility to open later than anticipated, and cost the client significant revenue. If the company uses its inside engineers to complete the design, it will have to pay them overtime for all work. Owner Roberta De Leon has estimated that it will cost $ per week wages and overhead including late weeks, to have company engineers complete the design. Roberta is also considering having an outside engineering firm do the design. A bid of $ has been received for the completed design. Yet another option for completing the design is to conduct a joint design by having a third engineering company complete all electromechanical components of the design at a cost of $ De Leon Engineering would then complete the rest of the design and control systems at an estimated cost of $ Roberta has estimated the following probabilities of completing the project within various time frames when using each of the three options. Those estimates are shown in the following table:
tableProbability of Completing the Design,OptionOn Time,One Week Late,Two Weeks Late,Three Weeks LateInternal Engineers,External Engineers,Joint Design,
The expected monetary value using inside engineers to complete the design is $Enter your response as an integer.
The expected monetary value using an outside engineering firm to complete the design is $ Enter your response as an integer.
The expected monetary value of conducting a joint design is $Enter your response as an integer.
What is the best decision based on an expected monetary value criterion?
Joint design
Internal engineers
External engineering firm
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