Question: Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a unique-event risk of 5.8%, and the

Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a "unique-event" risk of 5.8%, and the probability of a "super-event" that would disable both at the same time is estimated to be 1.6%. Option 2 uses two suppliers located in different countries. Each has a "unique-event" risk of 14%, and the probability of a "super-event" that would disable both at the same time is estimated to be 0.24%.

A. The probability that both suppliers will be disrupted using option 1 is (round your answer to five decimal places)

b) The probability that both suppliers will be disrupted using option 2 is (round your answer to five decimal places)

Which option is better for the company?

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