Please state what exactly the answer is in the format given and how you get it,

Question

Please state what exactly the answer is in the format given and how you get it, thanks. Also, pls consider the answer on the question if it helps, the cross means wrong, tick means correct. the excel worksheet mentioned below can be found here. https://drive.google.com/file/d/0BwRTtt2PMBD3NWZXRW5QbjRheTQ/view?usp=sharing

Problem 12-18 (Algorithmic) 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: Contractor Probability Distribution of Bid Uniform probability distribution between $600,000 and $800,000 Normal probability distribution with a mean bid of $700,000 and a standard deviation of $50,000 If required, round your answers to three decimal places a. If the building contractor submits a bid of $750,000, what is the probability that the building contractor will obtain the bid? Use an Excel worksheet to simulate 1,000 trials of the contract bidding process The probability of winning the bid of $750,000 -0.616X b. The building contractor is also considering bids of 775,000 and $785,000. If the building contractor would like to bid such that the probability of winning the bid is about 0.8, what bid would you recommend? Repeat the simulation process with bids of $775,000 and $785,000 to justify your recommendation. =| 0.811|x The probability of winning the bid of $775,0000.811X The probability of winning the bid of $785,000 = 0.899 | x The reccomendation would be to choose the bid of $ 775000

Explanation / Answer

(a) For the bids of 750,000 create 3 columns in excel as A, B, C

Where A and B are the 2 constructors and C is the one for whom we are considering the bid.

To generate simulation consider the following formulas:

in Col. A :" =RAND() * (800000-600000) + 600000 " :this will generate Uniform(600000,800000)

in Col.B :" =NORMINV(RAND(),700000,50000) " :this will generate Normal(700000,50000^2)

in Col. C:" =IF(AND(A2<750000,B2<750000),1,0) " :that will impose double condition on A and B and return if C wins the bid!

Drag it using fil-handle upto 1001 (since 1st row is for variable names)

Then use " =sum(c2:c1001) " this will count total number of 1's.

Then probability of wining the bid is = sum/1000

Here it is =0.646 (that may vary!)

(b)Similarly create 2 more colmns , one for 775000 and other one for 785000

and use the 2 formulas respectively

" =IF(AND(A2<775000,B2<775000),1,0) "

" =IF(AND(A2<785000,B2<785000),1,0) "

Then calculate the sum and divide by 1000 for both the columns

Prob[Winning the bid 775000] = 0.832

Prob[Winning the bid 785000] = 0.894

As bid probability should be around 0.8 , then the recommended bid would be 775,000

Since it is less in value but satisfies the probability criteria of the bidder!

NOTE:Since it is random simulation, the probability may vary!

Comment for further discussion :)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---