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Technical Note—A Note on Cost Estimation and the Optimal Bidding Strategy

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  • Martin J. Beckmann

    (Brown University, Providence, Rhode Island)

Abstract

This note determines the optimal bid price for a firm bidding against several other firms for a contract, when each firm knows the expected value of its own cost and a probability distribution of the other firms' cost. The optimal bid price is calculated as a function of the firm's own expected cost, first for the case of two identical firms and then for several firms.

Suggested Citation

  • Martin J. Beckmann, 1974. "Technical Note—A Note on Cost Estimation and the Optimal Bidding Strategy," Operations Research, INFORMS, vol. 22(3), pages 510-513, June.
    • Handle: RePEc:inm:oropre:v:22:y:1974:i:3:p:510-513
    DOI: 10.1287/opre.22.3.510
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    Cited by:

    1. Heinz Herrmann, 2019. "How to Increase Profits Through Predictive Analytics When Only Few Competitors’ Bids Are Known," FIIB Business Review, , vol. 8(1), pages 61-76, March.

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