Butler Company is preparing a bid on a new construction project. Two other contractors will be submitting bids for the same project. Based on past bidding practices, bids from other contractors can be described by the following probability distributions:
Contractor A: Uniform probability distribution between $500,000 and $1,000,000. Contractor B: Normal probability distribution with a mean bid of $700,000 and a standard deviation of $80,000.
a. If Butler Company submits a bid of $750,000, what is the probability Butler will obtain the bid. Simulate 200 trials of the contract bidding process.
b. Butler Company is also considering bids of $725,000 and $715,000. If Butler would like to bid such that the probability of winning the bid is about 80%, what bid would you recommend? Use simulation (200 trials) to justify your decision. Briefly explain your answer.