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As a question with a short answer please answer this question with as little as possible, but with as much as necessary information and analysis.
As a "question with a short answer" please answer this question with as little as possible, but with as much as necessary information and analysis. The organization has identied a risk that failure to accurately project customer demand will result in delays in order fulfillment due to unavailability of components of necessary quality. Failure to fulll orders on time will result in reputation damage, failed customer retention, and increased sales discounts and allowances. The assessed probability and impact of this risk are 20% and $10,000,000, respectively. The potential risk responses are: If enacted independently Policy 1. Acquire additional warehouse space in order to carry a greater amount of on hand critical inventory components, The residual risk after this response would be a probability of 10% and an impact of $10,000,000. The cost of implementing this policy would be $1,000,000 due to increased overhead and warehousing costs. Policy 2. Contractually Require vendors to ensure delivery of components within 24 hours of ordering or be subject to 10% discount on component cost. The residual risk after this response would be a probability of 15% and an impact of $5,000,000, The cost of implementing this policy is estimated at $750,000 due to increased expenses for contract enforcement, expected increase in per unit component cost, and greater difculty in finding and contracting compliant vendors. If both policies are enacted together.... 1. Due to the expectation of greater levels of "just-in-time" delivery provided by policy 2 the cost of policy 1 would be reduced to $500,000 due to lower required carrying cost for the needed on hand inventory of critical components. 2. Due to the reduced impact of a vendors policy 2 compliance failure provided by policy 1, the residual risk impact of policy 1 is now estimated at $5,000,000. In a short answer, please explain to the organization which policies, if any, the organization should impact and why
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