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

question 57

Multiple Choice

Dusty is evaluating two 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 and their product manager estimates the defect rate to be around 0.5%.If a section of fence fails,it costs an average of $500 in losses and herding costs to round up all of the capybaras.Dusty believes it will take 500 units to fence in this pasture configuration.The product manager's uncertainty has Dusty concerned; what defect rate for Lady would make Dusty indifferent between the two suppliers as far as total cost is concerned?

• A) 1%
• B) 0.5%
• C) 0.33%
• D) 0%

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