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The Jones Manufacturing Company is competing for a production contract that requires that work begin in January 2018. The cost package for the proposal must be submitted by July 2017. The business base, and therefore the overhead rates, are uncertain because Jones has the possibility of winning another contract, to be announced in September 2017. How can the impact of the announcement be included in the proposal? How would you handle a situation where another contract may not be renewed after January 2018, i.e., assume that the announcement would not be made until March?

Practical Management Science

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 36P

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The Jones Manufacturing Company is competing for a production contract that requires that work begin in January 2018. The cost package for the proposal must be submitted by July 2017. The business base, and therefore the overhead rates, are uncertain because Jones has the possibility of winning another contract, to be announced in September 2017. How can the impact of the announcement be included in the proposal? How would you handle a situation where another contract may not be renewed after January 2018, i.e., assume that the announcement would not be made until March?

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