An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 2

A building contractor is preparing a bid on a new construction project. Two other contractors will be submitting bids for the same project. Based on past bidding practices bids from the other contractors can be described by the following probability distributions:
a. If Rebuilding 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? Use a worksheet to simulate 1000 trials of the contract bidding process.
b. The building contractor is also considering bids of $625,000 and $615,000. 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? Repeat the simulation process with bids of $625,000 and $615,000 to justify your recommendation.