Walsh Construction Is Considering Two Options for Its Supplier Portfolio

question 61

Essay

Walsh Construction is considering two options for its supplier portfolio.Option 1 uses two local suppliers.Each has a "unique-event" risk of 8%,and the probability of a "super-even" that would disable both at the same time is estimated to be 2.5%.Option 2 uses two suppliers located in different countries.Each has a "unique-event" risk of 18%,and the probability of a "super-event" that would disable both at the same time is estimated to be 1.2%.
(a)What is the probability that both suppliers will be disrupted using option 1?
(b)What is the probability that both suppliers will be disrupted using option 2?
(c)Which option would provide the lowest risk of a total shutdown?

---

Definitions:

Internal

Pertaining to or situated within something.

Paramilitary Weapons

These are military-grade weapons that are used by non-military groups or forces, such as law enforcement agencies, for tactical operations.

Tactics

Strategies or maneuvers used in order to achieve a specific goal or objective, often within competitive or conflict situations.

Primarily Impacted

The individuals or groups most directly affected by an action, policy, or event, often bearing the brunt of its effects.