calculating bid value ?
Submitted by Renji2013 on Thu, 03/28/2013 - 04:24
You evaluate a vendor bid of $350. There is 65% probability that vendor will be behind schedule costing 125 and 35% probability of
doing early with a savings of 50. What is the total value of final bid
63.750
286.250
448.75
413.75
413.750 is shown as correct answer. But Im getting it as negative - 413.75, considering 350 as outflow.
Please explain how to get the correct answer?
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sspawar
Thu, 03/28/2013 - 06:01
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it is bid value - an
it is bid value - an expected monetory value. it is not any profit or loss
350+0.65*125-0.35*50 = 413.75
this part ( +0.65*125 - 0.35*50), net impact of probability over estimated value.