Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a “unique-event” risk of 5%, and the probability of a “super-event” that would disable both at the same time is estimated to be 1.5%. Option 2 uses two suppliers located in different countries. Each has a “unique-event” risk of 13%, and the probability of a “super-event” that would disable both at the same time is estimated to be 0.2%.a) What is the probability that both suppliers will be disrupted using option 1?b) What is the probability that both suppliers will be disruptedusing option 2?c) Which option would provide the lowest risk of a total shutdown?

Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a “unique-event” risk of 5%, and the probability of a “super-event” that would disable both at the same time is estimated to be 1.5%. Option 2 uses two suppliers located in different countries. Each has a “unique-event” risk of 13%, and the probability of a “super-event” that would disable both at the same time is estimated to be 0.2%.a) What is the probability that both suppliers will be disrupted using option 1?b) What is the probability that both suppliers will be disruptedusing option 2?c) Which option would provide the lowest risk of a total shutdown?

Name: Johnson Chemicals is considering two options for its supplier portfoli
Uploaded: 2024-03-20T07:06:41.000Z
Channel: Bartleby
Description: Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a “unique-event” risk of 5%, and the probability of a “super-event” that would disable both at the same time is estimated to be 1.5%.

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

See similar textbooks

Similar questions

A car insurance company has high-risk, medium-risk, and low-risk clients, who have, respectively, probabilities .04, .02, and .01 of filing claims within a given year. The proportions of the numbers of clients in the three categories are .15, .25, and .60, respectively. What proportion of the claims filed each year come from high-risk clients?
2. A venture capitalist, willing to invest $1,000,000, has three investments to choose from. The first investment, a software company, has a 11% chance of returning $5,000,000 profit, a 44% chance of returning $1,000,000 profit, and a 45% chance of losing the million dollars. The second company, a hardware company, has a 12% chance of returning $6,000,000 profit, a 24% chance of returning $2,500,000 profit, and a 64% chance of losing the million dollars. The third company, a biotech firm, has a 8% chance of returning $7,000,000 profit, a 37% of no profit or loss, and a 55% chance of losing the million dollars.Order the expected values from smallest to largest. first, third, second third, second, first second, first, third first, second, third second, third, first third, first, second
The twins, Nikki and Sean want to open a small convenience store. They have to decide whether to build a small, medium or big store. They consulted their older brother, Dave, who is a market analyst. Dave told them that he just finished a market study for a similar venture and his findings indicated a 0.35 probability that demand will be low and a 0.65 probability that demand will be high. If Nikki and Sean build a small store and demand is low, the net present value will be $150,000. If demand is high they have the option to buy their inventory from a wholesaler and realize a net present value of $100,000. If they decide they want to expand, they stand to realize a net present value of $120,000. If the twins build a medium-sized store and demand is low, the net present value will be $175,000. If the demand turns out to be high, they can do nothing and realize a net present value of $100,000. If they expand, they could realize a net present value of $135,000. If Nikki and Sean build…
b) Skyline Inc. is a risk-neutral profit maximizing enterprise. For each sold apartment, they receive a profit of 500. They directly cannot sell any apartment. Their salesperson Jim-who is a risk-averse agent-takes care of the sale. The probability of sale depends on Jim who may laze, try a bit or work hard. More effort means more disutility for Jim but more probability of sale for Skyline as given in the following table. Effort Disutility Probability of Sale laze 0.1 try a bit 1 0.3 work hard 2 0.4 Jim's utility is given by vw – disutility of effort, where w is the monetary compensation received. Jim's efforts are neither observable nor enforceable by Skyline Inc. Skyline is considering the following contracts for Jim: C1: Jim receives a constant pay of 100 in lieu of working hard. C2: Jim receives a base wage of 36 and a bonus of 108 whenever an apartment is sold. C3: Jim receives no base wage and a bonus of 400 whenever an apartment is sold For each contact what will be Jim's effort…
The principle of redundancy is used when system reliability is improved through redundant or backup components. Assume that a student's alarm clock has a 19.1% daily failure rate. If the student has two such alarm clocks, what is the probability that they both fail on the morning of an important final exam?
A company is trying to decide if they should make a bid on a project that would generate 450,000 in profit. It will cost $100,000 to develop the bid and they will have a 35% chance of winning the contract. What is the expected net profit (project profit less bid development cost) associated with making the bid?
A city manager is considering three strategies for a $1,000 investment. The probable returns areestimated as follows:• Strategy 1: A profit of $5, 000 with a probability of 0.20 and a loss of $1, 000 with a probability of0.80.• Strategy 2: A profit of $2, 000 with a probability of 0.40, a profit of $500 with a probability of0.30 and a loss of $1, 000 with a probability of 0.30.• Strategy 3: A certain profit of $400.(a) Which strategy has the highest expected profit?(b) If the city manager is going to pick only 1 strategy, which of the three strategies would youdefinitely advise against? Provide specific (numeric) details to support your answer.
Suppose 58.8% of small businesses experience cash flow problems in their first 5 years. A consultant takes a random sample of 557 businesses that have been opened for 5 years or less. What is the probability that greater than 55.85% of the businesses have experienced cash flow problems? Question 2 options: 1) 0.9214 2) 0.5000 3) -6.0341 4) 0.0786 5) >0.999
The following equally likely outcomes have been estimated for the returns on Portfolio G and Portfolio H: Scenario Portfolio G Portfolio H 1 5.0% 9.0% 2 3.0% -7.0% 3 9.0% 15.0% 4 9.0% -4.0% Which of the two portfolios is riskier? a. Portfolio H since it has the possibility of a negative return b. Portfolio G since it has the higher expected return c. Both portfolios are equally risky since the possible returns of each are equally likely to occur d. Portfolio H since its returns are more widely dispersed around the expected…
A stock index consists of businesses in both Europe and the United States. Assume that each business comprising the stock index makes a profit or loss independently of the other businesses in the index. Suppose that an American business on the stock index makes a profit 60%60% of the time and a European business makes a profit 80%80% of the time. If there are 840 American businesses and 720 European businesses in the stock index, what is the expected number of businesses in the stock index to make a profit?
Suppose a distribution center is considering three options for expansion. The first one is to expand into a new plant, the second to add on third-shift to the daily schedule, and third, a small expansion to the existing facility. There are three possibilities for demand. These are high, medium, and low having probabilities of 40%, 33%, and 27% respectively. Suppose that the profits for the expansion plans are as follows: The new plant expected outcomes are $110,000, $50,000, -$15,000, the third shift consideration would result in outcomes of $40,000, $20,000, $-5,000 and the small expansion choice would in the following dollar amounts $15,000, $13,000, -$1,500. The amount that the company must invest in each alternative is: new plant = $48,000, third shift = $15,100, small expansion = $8,700 a. The profit/loss (EMV) for the new plant is $ [Select] b. The profit/loss (EMV) for adding a third shift is $ [Select] c. The profit/loss (EMV) for the small expansion is $ [Select] d. Which of…
Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a "unique-event" risk of 4.5%, and the probability of a "super-event" that would disable both at the same time is estimated to be 1.3%. 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 0.18%. a) The probability that both suppliers will be disrupted using option 1 is ____ (round your response to five decimal places). b) The probability that both suppliers will be disrupted using option 2 is _____ (round your response to five decimal places).