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
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
a. If the building contractor submits a bid of $750,000, what is the probability the building contractor will obtain the bid? Use a worksheet to simulate 1000 trials of the contract bidding process.
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 0.80, what bid would you recommend? Repeat the simulation process with bids of $775,000 and $785,000 to justify your recommendation.