A local manager of a suburb wants to determine whether her city should contract out with a waste hauler as opposed to continuing with the city's sanitation department. She has the following data on contract terms (cost/ton of trash) paid by neighboring communities.

She wants to benchmark the cost ($/ton) for these 16 communities, figuring that her own community is not much different than these other communities and can expect to pay the average cost ($/ton). What's the benchmark cost ($/ton)?

What are the low and high values for cost ($/ton) and what is the range?

low= __________ high= __________ range= _____________

The population of her city is 47,325. The average resident produces 4.2 lbs. of trash per day, 365 days per year. A ton is 2,000 lbs. How many tons of trash will her city generate in a year?

If the city negotiates the benchmark cost ($/ton), what will be the annual cost of the contract?

The local manager estimates that the transaction costs of contracting will amount to $180,000/year (staff time, office expenses, phone expenses, etc.). If that estimate is accurate, what will be the total costs of contracting/year (cost of the contract + transaction costs)?

The budget for the city's sanitation department is currently $3,100,000. If the sanitation department is eliminated, what are the city's expected costs savings, if any, from contracting?