Ed Coan, president of Powerlifting inc., wants to create a portfolio of suppliers for the weight plates used in the company's products. Based on historical data and climate and geological forecasts, he estimates the probability of a "super-event" that would negatively impact all suppliers simultaneously to be 1% during the supply cycle. He further estimates the "unique-event" risk for any of the potential suppliers to be 3%. The marginal cost of managing an additional supplier is $25 thousand dollars, and the financial loss incurred if a disaster caused all suppliers to be down simultaneously is $10 million dollars. How many suppliers should he use? Assume that up to 3 nearly identical suppliers are available. (Do not round your intermediate calculations. Only enter a number. For ex:3. @orsdemir, Copyrighted content. Cannot be posted.)

Ed Coan, president of Powerlifting inc., wants to create a portfolio of suppliers for the weight plates used in the company's products. Based on historical data and climate and geological forecasts, he estimates the probability of a "super-event" that would negatively impact all suppliers simultaneously to be 1% during the supply cycle. He further estimates the "unique-event" risk for any of the potential suppliers to be 3%. The marginal cost of managing an additional supplier is $25 thousand dollars, and the financial loss incurred if a disaster caused all suppliers to be down simultaneously is $10 million dollars. How many suppliers should he use? Assume that up to 3 nearly identical suppliers are available. (Do not round your intermediate calculations. Only enter a number. For ex:3. @orsdemir, Copyrighted content. Cannot be posted.)

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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