There are two more parts to this question but i cannot unock them until i answer
ID: 414357 • Letter: T
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There are two more parts to this question but i cannot unock them until i answer the previous question. Will post in comments the question and upvote the correct answer once the question is complete. Thank you
Problem S11.4 Question Help * Johnson Chemicals is considering two options for its supplier portfolio Option 1 uses to local suppliers. Each has a unique event risk of 5 4%, and the probability of a super-event that would disable both at the same time is estimated to be 1.6%. Option 2 uses two suppliers located in different countries. Each has a unique event risk of 11%, and the probability of a super-event" that would disable both at the same time is estimated to be 0.24% a) The probability that both suppliers il be disrupted using option 1 is(round your response to five decimal places)Explanation / Answer
Assuming the probability for n suppliers is
P(n) = S + (1-S) U^n
Where S is the probability of a “Super-event”
And U is the probability of a “unique-event”
Hence, in the given question S => 1.6% = 0.016 and U => 5.4% = 0.054
For option 1, n = 2
So, P (2) = 0.016 + [ (1- 0.016) * (0.054 * 0.054)]
P (2) = 0.016 + [0.984 * 0.002916]
P (2) = 0.016 + 0.02869344 = 0.018869344 = 0.01887 (rounding off to 5-decimals)