1. Math
  2. Statistics And Probability
  3. a building contractor is preparing a bid on a new...

Question: a building contractor is preparing a bid on a new...

Question details

A building contractor is preparing a bid on a new construction project. Two other contractors will be submitting bids for this project. In this case, the lowest bid wins the contract. Based on past bidding practices, bids from the other contractors can be described by the following probability distributions (PLEASE SHOW IN EXCEL WITH FORMULAS FOR FULL RATING)

A. Suppose the building contractor submits a bid of $650,000, what is the probability that the contractor submits the lowest bid and wins the contract for the new construction project? Build a simulation model, in an Excel file to simulate 1000 trials of the contract bidding process

B. The building contractor is also considering bids of $625,000 and $615,000. Repeat the simulation process with bids of 625,000 and $615,000 as you did in part a. In each case what is the probability the building contractor will obtain the bid?

C. If the building contractor would like to bid such that the probability of winning the bid is about 0.80, what bid would you recommend?

Contractor

Probability Distribution of Bid

A

Uniform probability distribution between $600,000 and $800,000

B

Normal probability distribution with a mean bid of $700,000 and a standard deviation of $50,000

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution