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As a contractor, you are considering the possibility of bidding on two contracts, A and B. If you win the bid(s) you will need an
As a contractor, you are considering the possibility of bidding on two contracts, A and B. If you win the bid(s) you will need an off-site production facility. The cost of this facility is: $4,000,000 $4,000,000 S2,400,000 Off-site production facility for Contract A only: Off-site production facility for Contracts A and B together: Off-site production facility for Contract B only If you bid on one or both contracts, your bid preparation costs (whether you win the bid or not) would be: Bid preparation cost for Contract A only Bid preparation cost for Contracts A and B together: Bid preparation cost for Contract B only S200,000 S300,000 $150,000 If you win the bid(s), your project costs excluding the off-site facility would be For Contract A For Contract B S5,800,000 S4,700,000 Your expected bids are If you bid on Contract A only both contracts Contract B only If you bid on If you bid on 10,400,000Not applicable Contract A bid amount Probability of winning Contract A Contract B bid amount Probability of winning Contract B Use a decision tree to determine the optimal decision as to which contract(s) you should bid on You must show your decision tree 11,000,000 30% 40% 0% $8,000,000 20% Not applicable 7,600,000 0% 30%
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