Suppose That the Manager of a Company Has Estimated the Probability

question 173

Multiple Choice

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next five years that will disrupt all suppliers as 5%, and the probability of a unique-event that would disrupt one of them sometime during the next five years to be 10%. Supplier management costs during this period are $30,000 per supplier. The financial cost incurred if all suppliers are disrupted at the same time is estimated to be $2,000,000. Assume that up to five nearly identical suppliers are available. How many suppliers should the manager use?

• A) 1
• B) 2
• C) 3
• D) 4
• E) 5

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Definitions:

Downsizing

The process of reducing a company's workforce and/or scaling back its operations to lower expenses and streamline its organization.

Swoosh

A commonly recognized symbol of Nike, representing speed, movement, power, and motivation.

Brand Name

The name given to a product or service to distinguish it from others and create a recognizable identity in the market.

Downsizing

The practice of reducing a company's size through layoffs, closures, or the elimination of certain products or services, often to cut costs.