Reliant Press produces business forms for large customers: major banks, insurance companies, and the government. More than half of its sales are by competitive bid. Its largest facility receives an average of 10 bid requests per week and responds to 90 percent of them. The firm typically is one of three or four bidders on any job. In making its bids, Reliant has applied highly variable markups above cost (anywhere from 30 to 90 percent). As part of a review of its bid performance, the firm€™s chief of sales recently ordered the collection of bid data for the past four months; these data are shown in Table A. Table B shows the information the firm collected on the lowest competing bid for each auction during this period.
Table A

Table B
Number of Lowest
Markup (Range) Competing Bids
19% and below ............ 6
20€“29 .................. 10
30€“39 .................. 11
40€“49 .................. 17
50€“59 .................. 20
60€“69 .................. 17
70€“79 .................. 15
80€“89 .................. 14
90€“99 .................. 11
100% and above ........... 7
Total ............... 128
a. Based on the information in Table A, what is the firm€™s optimal markup?
b. Answer part (a) using the information in Table B. Do the tables support similar policy actions? Which table embodies betterinformation?

Transcribed Image Text:

Number of Bids Number of Winning Bids Markup 70 31 100 51 128 Total