Real-Life Decision Making
A load of head lettuce arrives from California with 850 boxes of 24 heads each. The price is $10 per carton, plus $2,500 for shipping.
The shipment is a day late, but the temperature is correct. The load shows a few problems with decay and some bruising, but it's still a number one grade.
However, it's Friday. Not all of the load will sell today. The competition is receiving fresh lettuce over the weekend for the Monday market. This load of head lettuce will be three days older than theirs on Monday.
An inspection is requested. You are the inspector.
The importer explains that he's going to lose a lot of money because the driver came in a day late and missed the Thursday market. He really needed the money to make rent on the warehouse next week. And in addition to his business expenses, he's got a new baby at home.
A load of lettuce is allowed to have 15 percent defects in it, provided there is no more than five percent decay, and still meet the number one grade.
You draw a random sample of 15 cartons from throughout the load and examine each head. Of the 360 heads of lettuce examined, you find 14 decayed and 40 bruised. That places the load just within the allowable range for the number one grade.
That means the importer owes the full invoice price to the grower. But he will have to sell the load at a slight loss on Monday because other people will have fresher lettuce.
But the importer has a suggestion.
"If you can make your inspection show eight percent decay and 17 percent bruising, I can get a $2,000 credit from the shipper for sending me bad lettuce and sell my lettuce at a profit," he says.
You've known the importer for a long time. There's definitely a degree of produce spoilage and you want to help him out.
However, you know that in California, it's been dry for three seasons. Growers have had to borrow money to keep going until the weather improves. Those who don't make payments to the bank are in danger of losing their farms. They are growing and shipping good lettuce this year and are hoping to make up a lot of their losses.
What do you do?