A project manager is sourcing equipment for a new IT project and must choose between two vendors: Odd IT and Even IT. To

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A project manager is sourcing equipment for a new IT project andmust choose between two vendors: Odd IT and Even IT. To simplifythe problem, the project manager decides to base the evaluation ofthe vendors’ proposals on the basis of total cost of ownership(TCO) and product reliability. Through research and talking toother project managers, the manager finds that Odd IT has a 60%chance of providing reliable equipment and its parts cost $300,000(this includes costs of installations and maintenance). There is,however, a 40% chance that the equipment will fail – in which case,costs could increase to $850,000.
If Even IT is chosen, there is an 80% chance of high reliabilityat a cost of $750,000 and a 20% chance of failure. Even ITprovides lifelong guarantees and maintenance services. Towhich of the two vendors would you award the contract? Why? Use theformula below to calculate the risk associated with each of the twovendor proposals.
Hint: the impact of the Odd IT proposal would be $550,000.Risk=Impact* Probability/Cost What does the valuecalculated by this formula represent? Odd IT risk = Even IT risk =Should the choice you made above. change? Why?
I am confused need for probability calculation for both but hereit says lifelong gurantees and maintenance from Even IT. which oneis to give the contract? Thanks