Cow Spot Computer Co. out- sources the production of motherboards for its computers. It has narrowed down its choice of suppliers to two companies: Maji and Induk. Maji is an older company with a good reputation, while Induk is a newer company with cheaper prices. Given the difference in reputation, 5% of the motherboards will be inspected if they are purchased from Maji, but 25% of the motherboards will be inspected if they are purchased from Induk. The following data refers to costs associated with Maji and Induk.
1. What is the relevant cost of purchasing from Maji and Induk?
2. What factors other than cost should Cow Spot consider?