Suppose That the Manager of a Company Has Estimated the Probability

question 193

Multiple Choice

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next three years that will disrupt all suppliers as 2%. In addition, the firm currently uses four suppliers for its main component, and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next three years to be 10%. Supplier management costs during this period are $30,000 per supplier. The financial cost incurred if all four suppliers are disrupted at the same time is estimated to be $10,000,000. What is the expected monetary value (cost) of the current supplier diversification arrangement?

• A) $320,980
• B) $415,680
• C) $10,120,000
• D) $318,568
• E) $8,240,000

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Definitions:

New-Product Development Process

The sequence of steps involved in bringing a new product from concept to market, including research, design, and testing.

Idea Generation

Idea generation is the process of creating, suggesting, or conceptualizing new thoughts, concepts, or solutions, often in the context of problem-solving or innovation.

New-Product Development Process

The series of steps from idea generation and screening to commercialization, used by companies to launch new products.

New-product

Products that have been recently developed and introduced to the market, offering new benefits or improvements over existing offerings.