Question
Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has aunique-event risk of 5.4%, and the probability
Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a"unique-event" risk of 5.4%, and the probability of a"super-event" that would disable both at the same time is estimated to be 1.3%. Option 2 uses two suppliers located in different countries. Each has a"unique-event" risk of 14%, and the probability of a"super-event" that would disable both at the same time is estimated to be 0.27%.
a) The probability that both suppliers will be disrupted using option 1 is? (round response to five decimalplaces).
b) The probability that both suppliers will be disrupted using option 2 is? (round response to five decimalplaces).
c) What option provides the lowest risk of a total shutdown?
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