Homework: Ch $111$ Homework

Question $2,$ Problem $$11\mathrm{.}2$

HW Score: $54\mathrm{.}55\%,6$ of $11$

Part $1$ of $4$

points

Points: $0$ of $1$

Question list

Question $1$

Question $2$

Question $3$

Question $4$

Question $5$

Question $6$

Question $7$

Phillip Witt, president of Witt Input Devices, wishes to create a portfolio of local suppliers for his new line of keyboards. As the suppliers all reside in a location prone to hurricanes, tornadoes, flooding, and earthquakes, Phillip believes that the probability in any year of a "super$-$event" that might shut down all suppliers at the same time at least $2$ weeks is $4\%.$ Such a total shutdown would cost the company approximately $$450,000.$ He estimates the "unique$-$event" risk for any of the suppliers to be $5\%.$ Assuming that the marginal cost of managing an additional supplier is $$15,500$ per year, how many suppliers should Witt Input Devices use? Assume that up to three nearly identical local suppliers are available.

Find the EMV for alternatives using $1,2,$ or $3$ suppliers.

EMV$(1)=$$$,($Enter your response rounded to the nearest whole number.$)$