Question: John Deere is deciding whether to implement a single or dual-sourcing strategy for one of the critical components used in production of its excavators at

John Deere is deciding whether to implement a single or dual-sourcing

John Deere is deciding whether to implement a single or dual-sourcing strategy for one of the critical components used in production of its excavators at its facility in Kernesville, NC. John Deere provides you with the following estimates: - The probability that any given supplier fails independently of the others is 9% (e.g. a quality failure) - The probability of a "super-event" which would knock out all of the potential suppliers is 0.9% (e.g. a natural disaster) - If all suppliers are down, John Deere will not be able to meet its orders and this creates an annualized loss of $1300000 per year. - The cost to manage a supplier is $9000 per year. Draw a decision tree to determine the best sourcing strategy for John Deere. Calculate the total annual expected cost if using a single-sourcing (one supplier) strategy. a. 1300884 b. 117162 c. 117081 d. 20700 e. 13305 f. 29700 g. 12503 h. 136647

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