60.1K

Verified Solution

Link Copied!

Problem 14-25 (All answers generated on the Analytic Solver Platform using 10,000 trials and random seed 1994.) Land Shark is investigating the sensitivity of its model to the assumptions it made on the random variables. In particular, Land Shark is interested in modeling how it generates its competitor's bid percentages. Land Shark simulation model fits a distribution to data in order to simulate competitor bid amounts. Rather than generating a competitors bid amount by resampling from the 250 observed bid amounts, use simulation software such as Analytic Solver Platform to fit an appropriate distribution based on these 250 data points and rerun the simulation model. In addition to considering the fit of the distribution to the data, when selecting a distribution, keep in mind the range of bid amounts that would be reasonable. Click on the datafile logo to reference the data. (a) Determine Land Shark's bid amount (rounded to the nearest $1,000) that maximizes its expected return. $ What is the probability that Land Shark wins the auction at this bid amount? (b) If Land Shark bids $5,000 more than the amount in part (a), what is the likelihood that it wins the auction? How much expected return does Land Shark sacrifice by increasing its bid in this manner? Rounded to the nearest $100. $

Answer & Explanation Solved by verified expert

See Answer