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Strassel Investors buys real estate, develops it, and resells it for a profit. A new property is available, and Bud Strassel, the president and owner of Strassel Investors, believes if he purchases and develops this property, it can then be sold for $151,000. The current property owner has asked for bids and stated that the property will be sold for the highest bid in excess of $100,000. Two competitors will be submitting bids for the property. Strassel does not know what the competitors will bid, but he assumes for planning purposes that the amount bid by each competitor will be uniformly distributed between $100,000 and $141,000. (a) What is the estimate of the probability Strassel will be able to obtain the property using a bid of $121,0007 (Use at least 5,000 trials. Round your answer three decimal places.) (b) How much does Strassel need to bid to be assured of obtaining the property? $121,000 O$131,000 $141,000 (c) Use the simulation model to compute the profit for each trial of the simulation run (noting that Strassel's profit is $0 if he does not win the bid). With maximization of profit as Strassel's objective, use simulation to evaluate Strassel's bid alternatives of $121,000, $131,000, or $141,000. What is the expected profit (in dollars) for each bid alternative? (Use at least 5,000 trials. Round your answers to the nearest dollar) expected profit for a bid of $121,000 expected profit for a bid of $131,000 expected profit for a bid of $141,000 What is the recommended bid? O $121,000 $131,000 O $141,000 $

Strassel Investors buys real estate, develops it, and resells it for a profit. A new property is available, and Bud Strassel, the president and owner of Strassel Investors, believes if he purchases and develops this property, it can then be sold for $151,000. The current property owner has asked for bids and stated that the property will be sold for the highest bid in excess of $100,000. Two competitors will be submitting bids for the property. Strassel does not know what the competitors will bid, but he assumes for planning purposes that the amount bid by each competitor will be uniformly distributed between $100,000 and $141,000. (a) What is the estimate of the probability Strassel will be able to obtain the property using a bid of $121,0007 (Use at least 5,000 trials. Round your answer three decimal places.) (b) How much does Strassel need to bid to be assured of obtaining the property? $121,000 O$131,000 $141,000 (c) Use the simulation model to compute the profit for each trial of the simulation run (noting that Strassel's profit is $0 if he does not win the bid). With maximization of profit as Strassel's objective, use simulation to evaluate Strassel's bid alternatives of $121,000, $131,000, or $141,000. What is the expected profit (in dollars) for each bid alternative? (Use at least 5,000 trials. Round your answers to the nearest dollar) expected profit for a bid of $121,000 expected profit for a bid of $131,000 expected profit for a bid of $141,000 What is the recommended bid? O $121,000 $131,000 O $141,000 $

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Strassel Investors buys real estate, develops it, and resells it for a profit. A new property is available, and Bud Strassel, the president and owner of Strassel Investors, believes if he purchases and develops this property, it can then be sold for $151,000. The current property owner has asked for bids and stated that the property will be sold for the highest bid in excess of $100,000. Two competitors will be submitting bids for the property. Strassel does not know what the competitors will bid, but he assumes for planning purposes that the amount bid by each competitor will be uniformly distributed between $100,000 and $141,000. (a) What is the estimate of the probability Strassel will be able to obtain the property using a bid of $121,000? (Use at least 5,000 trials. Round your answer three decimal places.) (b) How much does Strassel need to bid to be assured of obtaining the property? O $121,000 $131,000 $141,000 (c) Use the simulation model to compute the profit for each trial of the simulation run (noting that Strassel's profit is $0 if he does not win the bid). With maximization of profit as Strassel's objective, use simulation to evaluate Strassel's bid alternatives of $121,000, $131,000, or $141,000. What is the expected profit (in dollars) for each bid alternative? (Use at least 5,000 trials. Round your answers to the nearest dollar) expected profit for a bid of $121,000 expected profit for a bid of $131,000 expected profit for a bid of $141,000 What is the recommended bid? O $121,000 $131,000 $141,000 $ $
Transcribed Image Text:Strassel Investors buys real estate, develops it, and resells it for a profit. A new property is available, and Bud Strassel, the president and owner of Strassel Investors, believes if he purchases and develops this property, it can then be sold for $151,000. The current property owner has asked for bids and stated that the property will be sold for the highest bid in excess of $100,000. Two competitors will be submitting bids for the property. Strassel does not know what the competitors will bid, but he assumes for planning purposes that the amount bid by each competitor will be uniformly distributed between $100,000 and $141,000. (a) What is the estimate of the probability Strassel will be able to obtain the property using a bid of $121,000? (Use at least 5,000 trials. Round your answer three decimal places.) (b) How much does Strassel need to bid to be assured of obtaining the property? O $121,000 $131,000 $141,000 (c) Use the simulation model to compute the profit for each trial of the simulation run (noting that Strassel's profit is $0 if he does not win the bid). With maximization of profit as Strassel's objective, use simulation to evaluate Strassel's bid alternatives of $121,000, $131,000, or $141,000. What is the expected profit (in dollars) for each bid alternative? (Use at least 5,000 trials. Round your answers to the nearest dollar) expected profit for a bid of $121,000 expected profit for a bid of $131,000 expected profit for a bid of $141,000 What is the recommended bid? O $121,000 $131,000 $141,000 $ $
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