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BUS 640 Week 5 Assignment

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Question;Price Quotes and Pricing Decisions Applied ProblemsPlease, complete the following two applied problems in a Word or Excel document. Showall your calculations and explain your results. Submit your assignment in the drop box byusing the Assignment Submission button.Week 5 Assignment Study Guide1. Your company, Bright Paints, is one of a dozen companies manufacturing a specialreflective paint used for traffic signs. The State Department of Transportation has calledfor tenders to supply 10,000 gallons of blue reflective paint to be delivered within twomonths. You can foresee fitting in a production run of the blue paint and have decided tobid on the job. You calculate your incremental costs for this job to be $76,200. Thisparticular contract is standard, similar in all in respects to hundreds of contracts you havebid on over the past few years. Your pricing policy has been to apply a mark-up toincremental costs to arrive at the bid price. Your mark-up has been higher when you hadplenty of orders and lower when you had few or no orders to fulfill. You have assembleddata relating the mark-up rate used and the percentage of contracts won at each mark-uprate, as follows.Mark-up rate (%)0101520253035Percentage of contracts won atthat rate (%)95.984.865.441.315.73.00.a.Why would your company have bid with a zero mark-up on some past tenders? Whydidnt it win all of those contracts?b. What is the bid price that maximizes the expected contribution of the contract?c.Why, or why not, is the fixed-price mode of bidding likely to be the best one to use forthis contract?2. In calculating the incremental cost of a particular project, how would you treat thepossible future costs of a lawsuit that may occur as a result of this project, where the cost ofthe lawsuit might range from $10,000 to $500,000 with an associated probabilitydistribution?

 

Paper#53250 | Written in 18-Jul-2015

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