Transrail is bidding on a project that it figures will cost $400000 to perform.
Transrail is bidding on a project that it figures will cost $400000 to perform. Using a 25% markup it will charge $500000 netting a profit of $100000. However it has been learned that another company Rail Freight is also considering bidding on the project. If Rail Freight does submit a bid it figures to be a bid about $470000. Transrail really wants this project and is considering a bid with only a 15% markup to $460000 to ensure winning regardless of whether or not Rail Freight submits a bid.a. Prepare a profit payoff table from Transrails point of view. (7 points)b. For this payoff table find Transrails optimal decision using (1) the pessimistic approach (2) the optimistic approach and (3) minimax regret approach. (10 points)c. If Rail Freight is known to submit bids on only 25% of the projects it considers what decision should Transrail make? (6 points)d. Given the information in (c) what is EVPI? (7 points)
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