Question: Your company is considering whether it should bid for two contracts (C1 and C2) on offer from a government department for the supply of certain

Your company is considering whether it should bid for two contracts (C1 and C2) on offer from a government department for the supply of certain components. If bids are submitted, the company will have to provide extra facilities, the cost of which will have to be entirely recouped from the contract revenue. The risk, of course, is that if the bids are unsuccessful then the company will have to write off the cost of these facilities. The extra facilities necessary to meet the requirements of contract C1 would cost $50,000. These facilities would, however, provide sufficient capacity for the requirements of contract C2 to be met also. In addition the production costs would be $18,000. The corresponding production costs for contract C2 would be $10,000. If a bid is made for contract C2 only, then the necessary extra facilities can be provided at a cost of only $24,000. The production costs in this case would be $12,000. It is estimated that the bid preparation costs would be $2,000 if bids are made for contracts C1 or C2 only and $3,000 if a bid is made for both contracts C1 and C2. For each contract, possible bid prices have been determined. In addition, subjective assessments have been made of the probability of getting the contract with a particular bid price as shown below. Note here that the company can only submit one bid and cannot, for example, submit two bids (at different prices) for the same contract. Possible Probability bid of getting prices ($) contract Bidding for C1 only 120,000 0.30 110,000 0.85 Bidding for C2 only 70,000 0.10 65,000 0.60 60,000 0.90 Bidding for both C1 and C2 190,000 0.05 140,000 0.65 100,000 0.95 In the event that the company bids for both C1 and C2 it will either win both contracts (at the price shown above) or no contract at all. Construct a decision tree in Analytica Include node(s) that display all outcomes and decisions

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