A company is bidding to supply parts to a computer manufacturer. The competitors bids are estimated to be Normally distributed with an average of $260,000 and a standard deviation of $15,000. If the bid is won, the total cost of completing the order is $185,000.

a. Calculate the optimum bid using a decision tree.

b. Construct a simulation to determine the optimum bid.

c. Why is a fixed markup an inappropriate pricing strategy? Is we match anyones price an appropriate pricing strategy?