Question

During quantitative risk analysis, a project manager evaluates two vendor options for a critical component. Vendor A has a 30% chance of a $50,000 delay cost and a 70% chance of no additional cost. Vendor B has a 10% chance of an $80,000 delay cost and a 90% chance of no additional cost. Which vendor should the project manager select based on expected monetary value (EMV)?

Accepted Answer

Vendor B, because its EMV is $8,000, which is the lower expected cost

Answer

Vendor A, because its EMV is $15,000, which represents the lower total possible cost

Answer

Vendor A, because a 30% probability is more predictable than a 10% probability

Answer

Vendor B, because its worst-case cost of $80,000 is the deciding factor