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

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 (giant rodents from South America - their leather makes fine gloves) . 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%