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Question: A contractor must submit a bid proposal on one of three possible projects. Each project offers di…
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Question: A contractor must submit a bid proposal on one of three possible projects. Each project offers di...

Show transcribed image text A contractor must submit a bid proposal on one of three possible projects. Each project offers different profits and risks associated with wining the bid and actual profits from performing the work. For example, if the contractor submits a bid and wins, the predicted profit may range from high to low due to unknown site conditions. The following table summarizes the costs to bid each project and the associated profits and probabilities with respect to winning each bid. A. Develop a decision tree model representing the above problem. b. Using the Maximum Expected Value criterion, determine the optimal decision to maximize profit.

A contractor must submit a bid proposal on one of three possible projects. Each project offers different profits and risks associated with wining the bid and actual profits from performing the work. For example, if the contractor submits a bid and wins, the predicted profit may range from high to low due to unknown site conditions. The following table summarizes the costs to bid each project and the associated profits and probabilities with respect to winning each bid. A. Develop a decision tree model representing the above problem. b. Using the Maximum Expected Value criterion, determine the optimal decision to maximize profit.

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