EXHIBIT 8-5 Quality and Profit Data for Steel Grades 1-4 Profit $/Ton Relative Quality Factor Adjusted Profit S/Ton Steel Grade 1 2 3 4 $22 20 29 27 0.95 1.00 0.93 0.90 $20.90 20.00 26.97 24.30 * Losses for on-site rejections due to quality are estimated to be 5%, 0%, 7% and 10%, respectively, for the steel grades 1-4. quality (pipe uniformity, chemical segregation, low mechanical properties, etc.) vary between the four grades. Next, the management had established a minimum average profit per ton standard of $23 on this type of product. Based on a sale price of $80/ton, Exhibit 8-5 indicates the differences of quality and profits for the four steel grades. The management has also over- ruled the sales department's decision to make only Grade 1 or Grade 4 steel. Instead, a compromise to make a little less than twice as much Grade 1 as Grade 4 had now been reached. In view of all of these various foregoing fac- tors, including the need for a highly reliable pipeline, Mrs. Weekly, Vice Presi- dent of Operations, must make a decision on the amounts of each grade of steel to be produced. EXHIBIT 8-5 Quality and Profit Data for Steel Grades 1-4 Profit $/Ton Relative Quality Factor Adjusted Profit S/Ton Steel Grade 1 2 3 4 $22 20 29 27 0.95 1.00 0.93 0.90 $20.90 20.00 26.97 24.30 * Losses for on-site rejections due to quality are estimated to be 5%, 0%, 7% and 10%, respectively, for the steel grades 1-4. quality (pipe uniformity, chemical segregation, low mechanical properties, etc.) vary between the four grades. Next, the management had established a minimum average profit per ton standard of $23 on this type of product. Based on a sale price of $80/ton, Exhibit 8-5 indicates the differences of quality and profits for the four steel grades. The management has also over- ruled the sales department's decision to make only Grade 1 or Grade 4 steel. Instead, a compromise to make a little less than twice as much Grade 1 as Grade 4 had now been reached. In view of all of these various foregoing fac- tors, including the need for a highly reliable pipeline, Mrs. Weekly, Vice Presi- dent of Operations, must make a decision on the amounts of each grade of steel to be produced