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Session 8 - Template - Simulations

This document describes a simulation model for competitive bidding. It includes constants like project costs, mean bids and standard deviations. It then simulates bids from a number of bidders and calculates whether the user wins the bid and their potential profit. The document provides examples of competitive bidding simulations for oil well bidding, baseball salary arbitration and municipal pothole repair contracts.

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Prakhar Singh
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22 views6 pages

Session 8 - Template - Simulations

This document describes a simulation model for competitive bidding. It includes constants like project costs, mean bids and standard deviations. It then simulates bids from a number of bidders and calculates whether the user wins the bid and their potential profit. The document provides examples of competitive bidding simulations for oil well bidding, baseball salary arbitration and municipal pothole repair contracts.

Uploaded by

Prakhar Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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COMPETITIVE BID SIMULATION

Constants
Cost of Project $ 25,000.00
Cost of Bid $ 1,000.00
Number of Bidders
My Bid
Mean bid $ 50,000.00
St. dev. $ 10,000.00

Bidders # Will Bid? Bid Rand()


1
2
3
4
5
6

Do I win?
Profit
Optimal Bid

Simulation
COMPETITIVE BID SIMULATION - 12 Bidders

Constants
Cost of Project $ 25,000.00
Cost of Bid $ 1,000.00
Mean bid $ 50,000.00
St. dev. $ 10,000.00

Input
My Bid

Calculations
Number of Bidders

Bidders # Will Bid? Bid Rand()


1
2
3
4
5
6
7
8
9
10
11
12

Do I win?
Profit
Optimal Bid

Simulation
Oil Well Bidding

Constants
Profit $40 (in million)
Number of Bidders 3
Mean bid $30 (in million)
St. dev. $4 (in million)

Inputs
My Bid (in million)

Calculations
Bidders # Bid
1
2
3

Do I win?
Profit
Optimal Bid

Simulation
ROBINSON CANO'S SALARY BID

Constants Million $
Upper-limit on Seattle Mariner's bid $ 9.00
Lower-limit on Seattle Mariner's bid $ 6.00
Upper-limit on Seattle Arbitrator's bid $ 11.00
Lower-limit on Seattle Arbitrator's bid $ 8.00

Inputs
Cano's Bid

Calculations
Seattle Mariner's Bid
Arbitrator's Bid
Seattle-Arb Difference
Cano-Arb Difference
Winner
Cano's Salary

Simulations
UNIV OF HOUSTON SODA BID

Constants
Mean $ 6.00 Milion
St. dev. $ 1.50 Million
Profit per bottle sold $ 0.50 Million
Upper-limit of Company 2's bid $ 2.50 Million
Lower-limit of Company 2's bid $ 1.00 Million

Input
Company 1's Bid

Calculations
Bottles Sold Million
Profit Million
Company 2's Bid Million
Company 1 Wins?
Company 1 Profit

Simulations
Westheimer Road Pothole Bid

Constants
Mean $ 6.00 Million
St. dev. $ 0.50 Million
Cost of Fixing Potholes $ 4.00 Million

Input
Your Bid Million

Calculations
Competitor 1's Bid
Competitor 2's Bid
Competitor 3's Bid
Competitor 4's Bid

Are you the Winner?


Your Profit

Simulation

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