Carrie Construction (CC) is a company specializing in building airport runways and major highways. As a part of its business, it receives supplies of aggregate (stone, sand, gravel, and so on) from two suppliers: Austin Aggregate and Granger Materials. The CC purchasing department has a preference for buying from Granger based on price but occasionally has to order from Austin when Granger cannot fill the order.

Carrie Construction has recently had problems with the quality and the timeliness of deliveries. When a supplier delivers a load to CC, it goes through an initial inspection to assure it meets specification. If the load fails the initial inspection, it goes through a secondary inspection to determine the exact issue. Almost always, the issue can be resolved and the load can be used. The initial inspection costs $3,045 per load. A secondary inspection, which is more thorough, costs $15,225 per load. If a delivery is delayed, Carrie has to hire temporary workers or pay overtime to some employees. The average cost of a delayed load is $6,090.

The following are summary statistics from last year's purchases from the two suppliers:

	Granger Materials	Austin Aggregate
Number of loads	600	150
Average tons per load	5,000	10,000
Average price per ton	$ 7.80	$ 8.60
Number of initial inspections passed	456	141
Number of delayed deliveries	120	15

The sales manager of Granger Materials has proposed to the purchasing manager at Carrie Construction that Granger be given an exclusive contract to supply the aggregate. Assume that the total annual demand remains the same. If it receives the contract, Granger will deliver the aggregate in the same average-sized load as it does currently.

Required:

A. If Granger receives the exclusive contract, assume the load quality and delivery timeliness will remain the same as current experience. What is the maximum price Carrie Construction should offer Granger Materials for the exclusive contract?

Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.

B. Suppose Granger Materials guarantees that no deliveries will be delayed or it will repay Carrie Construction for the costs associated with the delays. What is the maximum price Carrie Construction should offer Granger Materials for the exclusive contract?

Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.

a. maximum price		per ton
B. maximum price		per ton