MoTech Company designs and assembles custom digital devices. It acquires components for assembly from a number of suppliers, but about 80% of its components come from one major provider, Thor Inc. The devices it sells are designed by a team of engineers to customer specification. Once designed, the necessary components are acquired and assembled by skilled technicians. Because each device MoTech sells is custom designed and assembled, considerable time may elapse between when MoTech bids on a project and when the devices are completed for delivery. Therefore, the near-term future costs of components and labor need to be accurately estimated to help assure that actual costs don't exceed those provided in its bids on projects. As a result of a strengthening in the U.S. economy during 2016, Charles Moore, the chief financial officer, has become concerned about the possibility of increases both in the prices of the components it acquires and the wage rates for its skilled technicians. At the end of 2016, as part of a plan to address those concerns, Mr. Moore is considering negotiating with its primary component provider, Thor Inc., a long-term purchase contract that would include