Find the bid price which maximizes expected contribution of

Reference no: EM13452727

Your company, Bright Paints, is one of a dozen companies manufacturing a special reflective paint used for traffic signs. The State Department of Transportation has called for tenders to supply 10,000 gallons of blue reflective paint to be delivered within two months. You can foresee fitting in a production run of the blue paint and have decided to bid on the job. You calculate your incremental costs for this job to be $76,200. This particular contract is standard, similar in all in respects to hundreds of contracts you have bid on over the past few years. Your pricing policy has been to apply a mark-up to incremental costs to arrive at the bid price. Your mark-up has been higher when you had plenty of orders and lower when you had few or no orders to fulfill. You have assembled data relating the mark-up rate used and the percentage of contracts won at each mark-up rate, as follows.

Mark-up rate (%)

Percentage of contracts won at that rate (%)

95.9

84.8

65.4

41.3

15.7

3.0

0.2

a. Why would your company have bid with a zero mark-up on some past tenders? Why didn't it win all of those contracts?

b. What is the bid price that maximizes the expected contribution of the contract?

c. Why, or why not, is the fixed-price mode of bidding likely to be the best one to use for this contract?

Reference no: EM13452727

Questions Cloud

Explain the main objectives of ratio analysis and why is : what are the main objectives of ratio analysis and why is this important to external users of the financial statements

Submit a 10 to 12 slide microsoftreg powerpointreg : submit a 10- to 12-slide microsoftreg powerpointreg presentation on telecommunications in health care with detailed

The basic economic problem is scarce resources unlimited : the basic economic problem is scarce resources unlimited wants. balancing supply and demand. harnessing self-interest

What are common miscommunications between men and women : individual assignment communication differences and strategiesmiddot write a 2000- to 2450-word paper in which

Find the bid price which maximizes expected contribution of : your company bright paints is one of a dozen companies manufacturing a special reflective paint used for traffic signs.

Environmental hazards and human healthbackground municipal : environmental hazards and human healthbackground municipal solid waste msw is all of the garbage refuse trash or junk

Compare and contrast what responsibility do stop codons : compare and contrast what role do stop codons play in protien synthesis? what are they used for in the coded

What strategies might facilitate effective communication : learning team assignment gender communication in a global workplace trainingimagineyour team works for the training

What have other reviewers said about this book use the book : 1. read fortress america gated communities in the us by blakely and snyder2. after reading and making notes comments

User Account

All Pages