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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Transcribed Image Text: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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