A transport company has won a contract worth £14 million. The contract has a 0.3
A transport company has won a contract worth £14 million. The contract has a 0.35 probability of delay. The penalty for the delay is 15% of the contract value. Taking either of the following actions now would reduce the risk of delay - Employing additional engineers at a cost of £150000 would reduce the probability of delay to 0.25 - Increasing the payouts to members of the public affected by the project at a cost of £750000 would reduce the probability of delay to 0.08.a) Calculate the expected value of the contract if no action is taken to reduce the risk of delay. The transport company wants to reduce the risk of delay. b) Calculate the expected value of the contract for each of the actions shown above. c) State which one of the actions you would recommend to the transport company Justify your recommendation, Requirements: long   |   .doc file

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