Benito is trying to decide whether to use one or two suppliers for a major component of his products. The suppliers are located in a coastal town that is prone to hurricanes. He estimates that the probability in any year of a "super-event" that might shut down all suppliers at the same time for at least two weeks is 5%. Such a total shutdown would cost the company approximately $100,000. He estimates the "unique-event" risk for any of the suppliers to be 8%. The marginal cost of managing an additional supplier is $6,000 per year. What is the probability (P) that both suppliers will be disrupted? O P- 5%

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Benito is trying to decide whether to use one or two suppliers for a major component of his products. The suppliers are located
in a coastal town that is prone to hurricanes. He estimates that the probability in any year of a "super-event" that might shut
down all suppliers at the same time for at least two weeks is 5%. Such a total shutdown would cost the company approximately
$100,000. He estimates the "unique-event" risk for any of the suppliers to be 8%. The marginal cost of managing an additional
supplier is $6,000 per year. What is the probability (P) that both suppliers will be disrupted?
O P- 5%
5.5%<P<=5.8%
O 5%<P<=5.5%
O 5.8% <P
Transcribed Image Text:Benito is trying to decide whether to use one or two suppliers for a major component of his products. The suppliers are located in a coastal town that is prone to hurricanes. He estimates that the probability in any year of a "super-event" that might shut down all suppliers at the same time for at least two weeks is 5%. Such a total shutdown would cost the company approximately $100,000. He estimates the "unique-event" risk for any of the suppliers to be 8%. The marginal cost of managing an additional supplier is $6,000 per year. What is the probability (P) that both suppliers will be disrupted? O P- 5% 5.5%<P<=5.8% O 5%<P<=5.5% O 5.8% <P
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