Jane operates a small IT consulting firm. Her company supplies services to a Fortune 500 company,Megacorp, through a regular contract. She estimates the costs of completing assignments for thiscompany and tracks the costs of completing the various jobs. She finds that her estimates aregenerally on target-sometimes she is a bit high; sometimes a bit low. On average her estimatedcosts of completing work for her client match the actual costs.Megacorp reduces the number of assignments made to Jane's company and Jane decides to bid fornew assignments with other clients. Jane wins bids to provide IT consulting services to three newclients and finds that her estimated costs of completing the jobs are well below that actual costs ofcompleting the jobs.Please use auction concepts to explain this outcome. Briefly explain. (Hint: The correct answer tothis question is much shorter than the question itself.)

Auction refers to the event where the contracts are formed through the process of bidding. It…

Answered: Please use auction concepts to explain…

Business

Operations Management

Please use auction concepts to explain this outcome.

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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Concept explainers

Buying

Buying is the activity that involves acquiring something of value in exchange for an asset. The acquisition could be goods or/and services. During the buying process, the exchange of value takes place between two or more parties. For instance, if you are offered a present from your relative, it can not be termed “buying” as value exchange is only from one side. Therefore, any form of gifting is not considered buying. The most common medium of exchange to facilitate buying is currency.

Question

Jane operates a small IT consulting firm. Her company supplies services to a Fortune 500 company,
Megacorp, through a regular contract. She estimates the costs of completing assignments for this
company and tracks the costs of completing the various jobs. She finds that her estimates are
generally on target-sometimes she is a bit high; sometimes a bit low. On average her estimated
costs of completing work for her client match the actual costs.
Megacorp reduces the number of assignments made to Jane's company and Jane decides to bid for
new assignments with other clients. Jane wins bids to provide IT consulting services to three new
clients and finds that her estimated costs of completing the jobs are well below that actual costs of
completing the jobs.
Please use auction concepts to explain this outcome. Briefly explain. (Hint: The correct answer to
this question is much shorter than the question itself.)

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