Question

A consulting firm submitted a bid for a large research project. the firm's management initially felt they had a 50-50 chance of getting the project. however, the agency to which the bid was submitted subsequently requested additional information on the bid. past experience indicates that for 77% of the successful bids and 40% of the unsuccessful bids the agency requested additional information.

Answer 1

Answer:

A) What is the prior probability of the bid being successful (i.e., prior to the request for additional information)?  

• 50% chance of being successful

B) What is the conditional probability of a request for additional information given that the bid will ultimately be successful?  

• 77% chance of being successful

C) Compute the posterior probability that the bid will be successful given a request for additional information.

• Using Bayess theorem = (50% x 77%) / [(50% x 77%) + (50% x 40%)] = 0.385 / (0.385 + 0.2) = 0.385 / 0.585 = 66%

Bayess theorem = (probability of success before the request x probability of success after the request) / [(probability of success before the request x probability of success after the request) + (probability of failure before the request x probability of failure after the request)]