Guolin Lai

DSC8240 Course Web

Background
Objective Hierarchies
Variables and Attributes
Influence Diagram
Mathematical Representation
Testing and Validation
Implementation and Use

Background

The Miller Construction Company is trying to decide whether to make a bid on a construction project.

Objective

The company wants to propose a lowest bid to beat the other four potential competitors and win the government contract.

Variables and Attributes

Variable	Variable Type	How Measured	Related to
Cost to prepare a bid	Input Variable	Total Amount in $	Sunk Cost
Cost to complete project	Input Variable	Total Amount in $	Fixed Cost
Miller's bid	Input Variable	Amount in $, multiple of 500	Variable Cost
competitors' bid	Input Variable	Multiple of Miller's bid	Miller's bid

Influence Diagram

Mathematical Representation

1, Use RISKIMTABLE function to test all of Miller's possible bids simultaneously.
2, Use RISKTRIANG(......)*Project Cost to generate random bids for the four competitors.
3, Use RISKOUTPUT() + IF(MillerBid < MIN(CompBids, 1, 0) to see whether Miller wins the bid.
4, Use RISKOUTPUT () + IF(WinBid=1, MillerBid - ProjectCost, 0) - BidCost to get the profit from completing the project.

Testing and Validation

Implementation and Use

The model can be manipulated in Microsoft Excel.
Please click here to view the Excel Model.