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

Martin J. Beckmann
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Martin J. Beckmann: Brown University, Providence, Rhode Island

Operations Research, 1974, vol. 22, issue 3, 510-513

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.

Date: 1974
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