Two construction companies are bidding against one another for the right to construct a new community center building. The first construction company, Fine Line Homes, believes that its competitor, Buffalo Valley Construction, will place a bid for this project according to the distribution shown in this table: Buffalo Valley's Bid Bid Probability $160,000 0.2 $165,000 0.5 $170,000 0.2 $175,000 0.1 Furthermore, Fine Line Homes estimates that it will cost $160,000 for its own company to construct this building. Given its fine reputation and long-standing service within the local community, Fine Line Homes believes that it will likely be awarded the project in the event that it and Buffalo Valley Construction submit exactly the same bids. Find the bid that maximizes Fine Line’s expected profit. Max expected profit $ ________ . Bid that maximizes profit $ ________ .

Two construction companies are bidding against one another for the right to construct a new community center building. The first construction company, Fine Line Homes, believes that its competitor, Buffalo Valley Construction, will place a bid for this project according to the distribution shown in this table: Buffalo Valley's Bid Bid Probability $160,000 0.2 $165,000 0.5 $170,000 0.2 $175,000 0.1 Furthermore, Fine Line Homes estimates that it will cost $160,000 for its own company to construct this building. Given its fine reputation and long-standing service within the local community, Fine Line Homes believes that it will likely be awarded the project in the event that it and Buffalo Valley Construction submit exactly the same bids. Find the bid that maximizes Fine Line’s expected profit. Max expected profit $ . Bid that maximizes profit $ .

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...

See similar textbooks

Similar questions

The Bennett Distribution Company, a subsidiary of a major home appliance manufacturer, wants to forecast sales for next year. The Atlantic Coast branch, with current sales of $193.8 million, is expected to achieve sales growth of 7.25%; the Midwest branch, with current sales of $79.3 million, is expected to have a increase of 8.20%, and that the Pacific Coast branch, with current sales of $57.5 million, increase its sales 7.15%. What is the predicted average growth rate in sales for the next year? Select one: Or a. The predicted average rate in sales for the next year is 7.46% Or b. The predicted average rate in sales for the next year cannot be calculated due to lack of information O c. The predicted average rate in sales for the next year is 22.6% Or d. The predicted average rate in sales for the next year is 7.53% 6
A friend who lives in Los Angeles makes frequent consultingtrips to Washington, D.C.; 50% of the time shetravels on airline #1, 30% of the time on airline #2, and the remaining 20% of the time on airline #3. For airline#1, flights are late into D.C. 30% of the time and late intoL.A. 10% of the time. For airline #2, these percentagesare 25% and 20%, whereas for airline #3 the percentagesare 40% and 25%. If we learn that on a particular trip shearrived late at exactly one of the two destinations, whatare the posterior probabilities of having flown on airlines#1, #2, and #3? Assume that the chance of a late arrival inL.A. is unaffected by what happens on the flight to D.C.[Hint: From the tip of each first-generation branch on atree diagram, draw three second-generation brancheslabeled, respectively, 0 late, 1 late, and 2 late.]
Janus Seagull had a car accident and was out of work for a year. Janus believes that the accident was caused by a vehicle defect. He consulted some lawyers and planned to sue the vehicle manufacturer. During negotiations, the legal team of the vehicle manufacturer offered a $700K settlement. However, Janus needs to settle the $100K in legal fees. Janus asked his lawyer for advice and the lawyer told him that he has a 50% chance of winning the case. If Janus loses, he will incur legal fees of $75K. If he wins, the full requested settlement is also not guaranteed. The lawyer believes that there is a 50% chance that Janus will receive full settlement of $3 million, of which Janus needs to settle $1 million in legal fees. There is a 50% chance that the jury will award Janus $1 million, of which 50% will be taken up by legal fees. What you need to do: 1) Use a decision tree to determine what is Janus’ best option. You need to show the complete decision tree in your submission. 2)…
The trend in home building in recent years has been to emphasize open spaces and great rooms, rather than smaller living rooms and family rooms. A builder of speculative homes in the college community of Oxford, Ohio, had been building such homes, but his homes had been taking many months to sell and had been selling for substantially less than the asking price. In order to determine what types of homes would attract residents of the community, the builder contacted a statistician at a local college. The statistician went to a local real estate agency and obtained the data contained in file OxHome. This data includes the sales price (measured in thousand dollars), square footage, number of rooms, number of bedrooms, and age for each of 60 single-family residences recently sold in the community. Using this data, a regression model was built to predict the sales price of houses in this community. The regression equation from the model is: sales price (thousand dollars) = 19.5 + 0.1079…
The trend in home building in recent years has been to emphasize open spaces and great rooms, rather than smaller living rooms and family rooms. A builder of speculative homes in the college community of Oxford, Ohio, had been building such homes, but his homes had been taking many months to sell and had been selling for substantially less than the asking price. In order to determine what types of homes would attract residents of the community, the builder contacted a statistician at a local college. The statistician went to a local real estate agency and obtained the data contained in file OxHome. This data includes the sales price (measured in thousand dollars), square footage, number of rooms, number of bedrooms, and age for each of 60 single-family residences recently sold in the community. Using this data, a regression model was built to predict the sales price of houses in this community. The regression equation from the model is: sales price (thousand dollars) = 19.5 + 0.1079…
The trend in home building in recent years has been to emphasize open spaces and great rooms, rather than smaller living rooms and family rooms. A builder of speculative homes in the college community of Oxford, Ohio, had been building such homes, but his homes had been taking many months to sell and had been selling for substantially less than the asking price. In order to determine what types of homes would attract residents of the community, the builder contacted a statistician at a local college. The statistician went to a local real estate agency and obtained the data contained in file OxHome. This data includes the sales price (measured in thousand dollars), square footage, number of rooms, number of bedrooms, and age for each of 60 single-family residences recently sold in the community. Using this data, a regression model was built to predict the sales price of houses in this community. The regression equation from the model is: sales price (thousand dollars) = 19.5 + 0.1079…
An insurance company offers four different deductible levels-none, low, medium, and high-for its homeowner's policyholders and three different levels-low, medium, and high-for its automobile policyholders. The accompanying table gives proportions for the various categories of policyholders who have both types of insurance. For example, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.05 (5% of all such individuals). Auto L M H Homeowner's N L M H 0.04 0.05 0.05 0.02 0.07 0.12 0.20 0.10 0.02 0.03 0.15 0.15 Suppose an individual having both types of policies is randomly selected. (a) What is the probability that the individual has a medium auto deductible and a high homeowner's deductible? (b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible? auto deductible homeowner's deductible (c) What is the probability that the individual is in the same category for both auto and homeowner's…
An insurance company offers four different deductible levels-none, low, medium, and high-for its homeowner's policyholders and three different levels-low, medium, and high-for its automobile policyholders. The accompanying table gives proportions for the various categories of policyholders who have both types of insurance. For example, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.05 (5% of all such individuals). Auto L M H Homeowner's NLMH 0.04 0.05 0.05 0.02 0.07 0.09 0.20 0.13 0.02 0.03 0.15 0.15 Suppose an individual having both types of policies is randomly selected. (a) What is the probability that the individual has a medium auto deductible and a high homeowner's deductible? (b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible? auto deductible homeowner's deductible (c) What is the probability that the individual is in the same category for both auto and homeowner's deductibles?…
An insurance company offers four different deductible levels-none, low, medium, and high-for its homeowner's policyholders and three different levels-low, medium, and high-for its automobile policyholders. The accompanying table gives proportions for the various categories of policyholders who have both types of insurance. For example, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.05 (5% of all such individuals). Homeowner's N L M н Auto L 0.04 0.05 0.05 0.02 M 0.07 0.11 0.20 0.11 0.02 0.03 0.15 0.15 Suppose an individual having both types of policies is randomly selected. (a) What is the probability that the individual has a medium auto deductible and a high homeowner's deductible? (b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible? auto deductible homeowner's deductible (c) What is the probability that the individual is in the same category for both auto and homeowner's deductibles?…
Avicenna, an insurance company, offers five-year commercial property insurance policies to small businesses. If the holder of one of these policies experiences property damage in the next five years, the company must pay out $23,600 to the policy holder. Executives at Avicenna are considering offering these policies for $791 each. Suppose that for each holder of a policy there is a 3% chance they will experience property damage in the next five years and a 97% chance they will not. (If necessary, consult a list of formulas.) If the executives at Avicenna know that they will sell many of these policies, should they expect to make or lose money from offering them? How much? To answer, take into account the price of the policy and the expected value of the amount paid out to the holder. O Avicenna can expect to make money from offering these policies. In the long run, they should expect to make dollars on each policy sold. O Avicenna can expect to lose money from offering these policies.…
Avicenna, an insurance company, offers five-year commercial property insurance policies to small businesses. If the holder of one of these policies experiences property damage in the next five years, the company must pay out $26,500 to the policy holder. Executives at Avicenna are considering offering these policies for $497 each. Suppose that for each holder of a policy there is a 2% chance they will experience property damage in the next five years and a 98% chance they will not.(If necessary, consult a list of formulas.) If the executives at Avicenna know that they will sell many of these policies, should they expect to make or lose money from offering them? How much? To answer, take into account the price of the policy and the expected value of the amount paid out to the holder. Avicenna can expect to make money from offering these policies. In the long run, they should expect to makedollars on each policy sold. Avicenna can…
The question is in the image