Following the incident of a furnace fire in the semiconductor plant in Albuquerque, New Mexico, Wellington Company

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Following the incident of a furnace fire in the semiconductor plant in Albuquerque, New Mexico, Wellington Company decided to change its single-sourcing strategy of major components to multi-sourcing. The top management of Wellington Company believes that the probability in any year of a “superevent” that might shut down Albuquerque plant again for at least 2 weeks is 0.3%, causing financial strains of €600,000. However, the probability of a “unique event” risk for any of the suppliers is estimated to be 2%. Evaluate the number of suppliers Wellington Company should select, assuming that the marginal cost of managing each supplier will not exceed €10,000 per year and that up to three nearly identical suppliers are available. lop6

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Operations Management Sustainability And Supply Chain Management

ISBN: 9781292295039

13th Global Edition

Authors: Jay Heizer, Barry Render, Chuck Munson

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