Bloom's Jeans is searching for new suppliers, and Debbie Bloom, the owner, has narrowed her choices to two sets. Debbie is very concerned about supply disruptions, so she has chosen to use three suppliers no matter what. For option 1, the suppliers are well-established and located in the same country. Debbie calculates the "unique-event" risk for each of them to be 5%. She estimates the probability of a nationwide event that would knock out all three suppliers to be 2.2%. For option 2, the suppliers are newer but located in three different countries. Debbie calculates the "unique-event" risk for each of them to be 21%. She estimates the "super-event" probability that would knock out all three of these suppliers to be 0.3%. Purchasing and transportation costs would be $950 comma 000 per year using option 1 and $960 comma 000 per year using option 2. A total disruption would create an annualized loss of $480 comma 000.a) the probability that all three suppliers will be disrupted using option 1 is your response to five decimal places).b) the probability that all three suppliers will be disrupted using option 2 is your response to five decimal places).c) the total annual purchasing and transportation cost plus expected annualized disruption cost for option 1 is your response to the nearest whole number).d) the total annual purchasing and transportation cost plus expected annualized disruption cost for option 2 is your response to the nearest whole number).e) based on the total annual purchasing and transportation cost plus expected annualized disruption cost,(option 1 or option 2) seems best.

Part a: The required probability for option 1 is is 0.02212.

Part b: The required probability for option 2 is is 0.01223.

Part c: The total cost for option 1 is $960617.6

Part d: The total cost for option 2 is $965870.4

Part e: Option 1 is the better option with the total cost of $960617.6  as compared to $965870.4 for option 2.

Explanation:

Part a:

For the option A

Probability of an event which can knockdown suppliers nation wide is given as

P(U)=5%

Probability of the super event such that knock out all three of these suppliers is as

P(S)=2.2%

So the required probability is given as

So the required probability is 0.02212.

Part b:

For the option B

Probability of an event which can knockdown suppliers nation wide is given as

P(U)=21%

Probability of the super event such that knock out all three of these suppliers is as

P(S)=0.3%

So the required probability is given as

So the required probability is 0.01223.

Part c:

The Cost is given as

Purchase and Transportation Cost is as P_C=$950,000

Annualized Losses is as AL=$480,000

Also the probability as calculated in part a is as P(X)= 0.02212

So the total cost is given as

So the total cost for option 1 is $960617.6

Part d:

The Cost is given as

Purchase and Transportation Cost is as P_C=$960,000

Annualized Losses is as AL=$480,000

Also the probability as calculated in part a is as P(X)= 0.01223

So the total cost is given as

So the total cost for option 2 is $965870.4

Part e

On the basis of the total cost, as the value is less for option 1 thus option 1 is the better option with the total cost of $960617.6  as compared to $965870.4 for option 2.

the interest will be $59.71

hope this

yup the answer is