Apply the Expected Value Approach to Decision Making A) Outsource

question 8

Multiple Choice

Apply the expected value approach to decision making.
-A mid-size company is transitioning to a new ERP system. Consequently, company
Files need to be modified and / or updated so as to be compatible for transfer to the new
System. The company is considering three alternatives to deal with this extra work load:
(1) outsourcing (2) hiring temporary staff or (3) using full time staff in overtime. The
Estimated costs (in $100,000) associated with each of these actions depend on the
Difficulty level associated with file modification and transfer, which can be at one of
Three levels (easy, moderately difficult, or extremely difficult) as shown below. If the
Likelihoods of easy, moderately difficult and extremely difficult file modifications are 0.2,0.4 and 0.4, respectively, the best decision according to the expected value approach is to $$\begin{array} { | l | l | l | l | } \hline \text { Action } & \text { Easy } & \text { Moderately Difficult } & \text { Extremely Difficult } \\\hline \text { Outsource } & 2.5 & 3.0 & 3.5 \\\hline \text { Temporary Staff } & 1.5 & 2.6 & 4.0 \\\hline \text { Overtime } & 1.2 & 2.8 & 4.2 \\\hline\end{array}$$

• A) outsource.
• B) hire temporary staff.
• C) use full time staff in overtime.
• D) outsource if the file modifications are extremely difficult.
• E) use full time staff in overtime if the file modifications are easy.

Knowledge of legislative and societal responses to slave rebellions and discussions on the emancipation of slaves.

Understand the concepts of demand and supply, including the determinants and how they affect the equilibrium price and quantity.

Analyze the effects of changes in the determinants of demand and supply on market equilibrium.

Grasp the impact of government interventions, such as price floors and ceilings, on market outcomes.

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Definitions:

Systematic Desensitization

A behavioral therapy technique used to reduce phobic responses and anxiety through gradual exposure to the feared object or situation combined with relaxation exercises.

Three Step Process

A general sequence of three stages or actions undertaken to achieve a particular outcome or solve a problem.

Psychotherapy

A therapeutic treatment method involving psychological techniques to help people overcome mental health issues, behavioral problems, or emotional difficulties.

Computer-Based Therapy

A therapeutic approach that uses digital platforms and software applications to deliver psychological support and interventions.