Question: Two construction companies, Pine Grove Construction (PGC) and Eagle Construction, are bidding against one another to construct a new community center. PGC estimates that it

Two construction companies, Pine Grove Construction (PGC) and Eagle Construction, are bidding against one another to construct a new community center. PGC estimates that it will cost

$1,260,000 to build the community center. Based on previous contract bidding, PGC believes that Eagle Construction will place a bid according to the probability distribution shown below. What should PGC bid?

Eagle Construction’s Bid ($) Probability 1,260,000 0.05 1,270,000 0.35 1,280,000 0.30 1,290,000 0.20 1,300,000 0.10

a. Construct a decision tree to determine the optimum decision.

b. Construct a simulation to determine the optimum decision.

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