Question: How much should be budgeted for each bridge in case of failure (see Chapter 10)? Costs and probabilities are as summarized in the table below.

How much should be budgeted for each bridge in case of failure (see Chapter 10)? Costs and probabilities are as summarized in the table below.

ABC

Conventional

Direct cost to the company if the bridge fails

$75,000,000

$225,000,000

Indirect cost to the company if the bridge fails (loss of goodwill)

$100,000,000

$75,000,000

Probability of bridge failure

1/800

1/500

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