An apparel company is creating a portfolio of suppliers. The company believes that the probability of...

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An apparel company is creating a portfolio of suppliers. The company believes that the probability of a "super-event" that could shut down all suppliers at the same time is 0.3% with a total loss of $2,500,000. The company estimates the "unique-event" risk for any of the suppliers to be 10%. The marginal cost of managing an additional supplier is $20,000 per year. a. How many suppliers should the company use? (Assume that up to three potential suppliers are available). b. Use the following criteria to rank the suppliers. Scales (0-1) Cost Quality Supplier 1 0.2 0.7 Supplier 2 Supplier 3 Weights Importance 0.6 0.4 of 0.65 0.3 0.5 0.35 An apparel company is creating a portfolio of suppliers. The company believes that the probability of a "super-event" that could shut down all suppliers at the same time is 0.3% with a total loss of $2,500,000. The company estimates the "unique-event" risk for any of the suppliers to be 10%. The marginal cost of managing an additional supplier is $20,000 per year. a. How many suppliers should the company use? (Assume that up to three potential suppliers are available). b. Use the following criteria to rank the suppliers. Scales (0-1) Cost Quality Supplier 1 0.2 0.7 Supplier 2 Supplier 3 Weights Importance 0.6 0.4 of 0.65 0.3 0.5 0.35

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To determine the optimal number of suppliers lets consider the risk and cost associated with managing them Part a Number of Suppliers Given Probabilit... View the full answer