Reference no: EM132730000

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next three years that will disrupt all suppliers as 5%. In addition, the firm currently uses five suppliers for its main component, and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next three years to be 13.25%. Supplier management costs during this period are $8,000 per supplier. The financial cost incurred if all five suppliers are disrupted at the same time is estimated to be $80,000. What is the expected monetary value (cost) of the current supplier diversification arrangement? (Round it to the nearest whole number)