Dusty is evaluating three bids to supply fence hardware for the 5 acres of pasture that need to be fenced. Breezy submits a bid of $40 per unit with a defect rate of 3%; Lady's bid is $50 per unit with a defect rate of 0.5%; and Spike's bid is $30 per unit with a defect rate of 5%. If a section of fence fails, it costs an average of $500 in losses and herding costs to round up all of the capybaras (giant rodents from South America - their leather makes fine gloves). Dusty believes it will take 500 units to fence in this pasture configuration; which supplier should win the business?
A)Spike
B)Breezy
C)Lady
D)no difference between Breezy and Spike

Question

Quizplus · Accepted Answer

Lady's bid, despite being the highest per unit, has the lowest overall cost when considering the defect rate and the associated costs of a failure.

Dusty Is Evaluating Three Bids to Supply Fence Hardware for the 5