A manager has to decide whether to prepare a bid or not. It costs P5,000 to prepare the bid. If the bid is submitted, the probability that the contract will be awarded is 50%. If the company is awarded the contract, it may earn an income of P100,000 if it succeeds, or pay a fine of P8,000 if it fails. The probability of success is estimated to be 80%. Should the manager prepare the bid? Make a decision tree and state your decision.
A manager has to decide whether to prepare a bid or not. It costs P5,000 to prepare the bid. If the bid is submitted, the probability that the contract will be awarded is 50%. If the company is awarded the contract, it may earn an income of P100,000 if it succeeds, or pay a fine of P8,000 if it fails. The probability of success is estimated to be 80%. Should the manager prepare the bid? Make a decision tree and state your decision.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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![A manager has to decide whether to prepare a bid or not. It costs P5,000 to prepare the bid. If the bid is submitted, the
probability that the contract will be awarded is 50%. If the company is awarded the contract, it may earn an income of P100,000 if
it succeeds, or pay a fine of P8,000 if it fails. The probability of success is estimated to be 80%. Should the manager prepare the
bid? Make a decision tree and state your decision.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F96a72910-6ab0-45c4-a858-ba8b3a4ff7bd%2F006124db-f9a1-4eb7-979f-5e0dc83b92f9%2Ffn5qu9i_processed.png&w=3840&q=75)
Transcribed Image Text:A manager has to decide whether to prepare a bid or not. It costs P5,000 to prepare the bid. If the bid is submitted, the
probability that the contract will be awarded is 50%. If the company is awarded the contract, it may earn an income of P100,000 if
it succeeds, or pay a fine of P8,000 if it fails. The probability of success is estimated to be 80%. Should the manager prepare the
bid? Make a decision tree and state your decision.
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