Consider the following two scenarios [ Option A and Option B ]: Manaka Inc. has the total inventory of \$6,000. Currently, Manaka has this entire…

3. Consider the following two scenarios [Option A and Option B]:

Manaka Inc. has the total inventory of \$6,000. Currently, Manaka has this entire inventory stored in one warehouse. There is a 20% chance that a fire could occur. If this fire occurs, then Manaka will lose their entire inventory. [Option A]

As an alternative to keeping their entire inventory in one warehouse, Manaka is considering separating their inventory evenly into two different warehouses. Once again, there is a 20% chance that a fire could occur in each warehouse. If this fire occurs, then Manaka would once again lose their entire inventory in that particular warehouse. [Option B]

1.          First, consider Option A.

What is the probability of having zero dollars in losses? What is the probability of having \$6,000 in losses?

Derive the probability distribution for total dollar losses under Option A. Note that this question asks for total dollar losses, not number of losses. Hint: Think about the definition of a probability distribution and apply it in this case. [2 points]

2.          Now consider Option B.

Derive the probability distribution for total losses under Option B. Hint: In the case of Option B, you need to consider all the possible outcomes in terms of dollar amount of losses, recognizing that Manaka now has two warehouses. Further hint: consider the rules of probability as discussed in class when you derive your probability distribution. [4 points]

3.          Compare the amount of risk Manaka faces under Option A vs. Option B. Which option has more risk? Justify and demonstrate your answer. Recall our discussion in Topic 4 about how we measure risk. [4 points]

Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)
Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.