A construction company needs to select a supplier for concrete. Supplier X offers a lower price per cubic yard ($80) but has a 5% defect rate. Supplier Y is more expensive ($90 per cubic yard) but has only a 1% defect rate. Defective concrete requires complete re-work, costing an additional $200 per cubic yard in labor and materials. The company needs 1,000 cubic yards of concrete. For each objective below, select the supplier that would be the better choice.
✓ Correct Answer: Option B
For Objective 1 (Minimize total cost): Supplier X total cost = (1000 * 80) + (0.05 * 1000 * 200) = $80,000 + $10,000 = $90,000. Supplier Y total cost = (1000 * 90) + (0.01 * 1000 * 200) = $90,000 + $2,000 = $92,000. So X is cheaper. For Objective 2 (Maximize overall project quality): Supplier Y has a lower defect rate (1% vs 5%), directly contributing to higher quality.