Hi,
In this lesson I learnt that bidding against competitors on a project, the two major sources of uncertainty are the number of competitors and the bids submitted by each competitor. If our bids are low, we'll work on lots of projects but make very little money on each one. The optimal bid is somewhere in the middle. Monte Carlo simulation is a useful tool for determining the bid that maximizes expected profit.
Click here to see how it could calculate and some examples.
In this lesson I learnt that bidding against competitors on a project, the two major sources of uncertainty are the number of competitors and the bids submitted by each competitor. If our bids are low, we'll work on lots of projects but make very little money on each one. The optimal bid is somewhere in the middle. Monte Carlo simulation is a useful tool for determining the bid that maximizes expected profit.
Click here to see how it could calculate and some examples.
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