Question
Two construction companies, Giant and Sky, bid for the right to build in a field. The possible bids are $ 10 Million, $ 20 Million,
Two construction companies, Giant and Sky, bid for the right to build in a field. The possible bids are $ 10 Million, $ 20 Million, $ 30 Million, $ 35 Million and $ 40 Million. The winner is the company with the higher bid. The two companies decide that in the case of a tie (equal bids), Giant is the winner and will get the field. Giant has ordered a survey and, based on the report from the survey, concludes that getting the field for more than $ 35 Million is as bad as not getting it (assume loss), except in case of a tie (assume win). Sky is not aware of this survey. (a) State reasons why/how this game can be described as a two-players-zero-sum game [5 Marks] (b) Considering all possible combinations of bids, formulate the payoff matrix for the game. [5 Marks] (c) Explain what is a saddle point. Verify: does the game have a saddle point? [5 Marks] (d) Construct a linear programming model for Company Sky in this game. [5 Marks] (e) Produce an appropriate code to solve the linear programming model in part (d). [5 Marks] (f) Solve the game for Sky using the linear programming model and the code you constructed in parts (d) and (e). Interpret your solution. [5 Marks
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