Create portfolio of local suppliers for his new line

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Reference no: EM131809760

Phillip? Witt, president of Witt Input? Devices, wishes to create a portfolio of local suppliers for his new line of keyboards. As the suppliers all reside in a location prone to? hurricanes, tornadoes,? flooding, and? earthquakes, Phillip believes that the probability in any year of a? "super-event" that might shut down all suppliers at the same time at least 2 weeks is 3?%. Such a total shutdown would cost the company approximately ?$520,000. He estimates the? "unique-event" risk for any of the suppliers to be 7?%. Assuming that the marginal cost of managing an additional supplier is ?$14,800 per? year, how many suppliers should Witt Input Devices? use? Assume that up to three nearly identical local suppliers are available. Find the EMV for alternatives using? 1, 2, or 3 suppliers.

Reference no: EM131809760

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