Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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How do I do this question in order for me to get the EMC using 1, 2 and 3 suppliers?
Problem S11.3
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Phillip Witt, president of Witt Input Devices, wishes to create a portfolio of local suppliers for his new line of keyboards. Suppose that Phillip
is willing to use one local supplier and up to two more located in other territories within the country. This would reduce the probability of a
"super-event" that might shut down all suppliers at the same time at least 2 weeks to 0.3%, but due to increased distance the annual costs
for managing each of the distant suppliers would be $24,500 (still $16,000 for the local supplier). A total shutdown would cost the company
approximately $470,000. He estimates the "unique-event" risk for any of the suppliers to be 4%. Assuming that the local supplier would be
the first one chosen, how many suppliers should Witt Input Devices use?
Find the EMV for alternatives using 1, 2, or 3 suppliers.
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Transcribed Image Text:Problem S11.3 Question Help Phillip Witt, president of Witt Input Devices, wishes to create a portfolio of local suppliers for his new line of keyboards. Suppose that Phillip is willing to use one local supplier and up to two more located in other territories within the country. This would reduce the probability of a "super-event" that might shut down all suppliers at the same time at least 2 weeks to 0.3%, but due to increased distance the annual costs for managing each of the distant suppliers would be $24,500 (still $16,000 for the local supplier). A total shutdown would cost the company approximately $470,000. He estimates the "unique-event" risk for any of the suppliers to be 4%. Assuming that the local supplier would be the first one chosen, how many suppliers should Witt Input Devices use? Find the EMV for alternatives using 1, 2, or 3 suppliers.
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