A construction company is creating a quantitative model for use in bidding on ne

Question

A construction company is creating a quantitative model for use in bidding on new projects. The company has identified the following variables to include in the model.

•         Whether or not to submit a bid (yes/no)
•         The amount of the company’s bid
•         The number of competitors bidding on the project
•         The amount of each competitor’s bid
•         The cost of completing the project
•         The company’s profit or loss

Classify each of these variables as a decision variable, an uncontrollable variable, or a result variable, explaining your reasoning for each classification.

Explanation / Answer

1) Whether or not to submit a bid (yes/no) - Decision variable because it is under the purview of the company to go or not go for the bidding process, hence a decision that the company needs to take

2) The amount of the company's bid - Decision variable because it again for the company to decide on the bidding amount, hence a decision to make

3) The number of competitor's bidding on the project - Uncontrollable variable since company can't control on the number of competitors taking part in the bidding process

4) The amount of each competitor’s bid - Uncontrollable variable as the company has no control or idea on what the bid amount of competitor will be

5) The cost of completing the project - Decision variable as the company can decide on the cost to be spent at different phases of the project

6) The company’s profit or loss - Result variable since it depends on the revenue earned by the company through the projects it constructed

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