Question
Please help: There are two supplier portfolio options available for Leonard Windows Hardware. The first option uses two local suppliers. Each supplier has a specific
Please help:
There are two supplier portfolio options available for Leonard Windows Hardware. The first option uses two local suppliers. Each supplier has a specific "unique-event" risk of 8%, and the probability of a "super-event" that could fail both at the same time is estimated to be 2.5%. The second option 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 the first option?
(b)What is the probability that both suppliers will be disrupted using the second option?
(c)Which option would provide the lowest risk of a total shutdown?
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