Nagesh shared his concerns regarding very high procurement cost over the last few years with Maxtronics Inc. The supplier rm suggested a new contract structure. Sattva could reserve certain units of supplier's component capacity by paying unit reservation price of $25. Sattva would be free from any obligation to purchase the reserved units. Next, after the demand information was revealed, Sattva could place the order to Maxtronics Inc. at unit procurement price of {750. The maximum quantity that Maxtronics would deliver was the amount reserved by Sattva