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 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 dual-sourcing (two supplier) strategy. a. 11700 b. 135096 c. 126096 d. 29700 e. 40135 f. 10435 g. 28435 h. 31230
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
