Supplier Concentration and Outage Risk
A short contract manufacturing decision problem. Use the supplied facts, commit to one action, then check your reasoning. Fictional practice; no leaderboard score is recorded.
Contract manufacturing · efficiency versus resilience
Consolidating to a single supplier would save 7% on materials, worth about $340,000 a year. That supplier is in one region and currently provides 45% of your input. A two-week outage last year, when they were one of three suppliers, cost you roughly $200,000.
| Given fact | Scenario data |
|---|---|
| Single-supplier savings | 7%; about $340,000 / year |
| Supplier geography | One region |
| Current share of input | 45% |
| Past outage | 2 weeks; about $200,000 cost |
| Supplier count during past outage | 3 |