Lamda Computer Products competed for and won the contract to manufacture tow prototype units of the new type of computer which is based upon laser optics rather than on electronic binary bits. The first unit manufactured by Lamda took 5,000 hours to manufacture and required $250,000 worth of the equipment usage, material and supplies. The second unit took 3,500 hours and employed $200,000 worth of materials, supplies and equipment usage. Labour is $30 per hour.

a. Lamda was asked to present the bid for ten extra units as soon as the second unit was completed. Production would start instantly. What would this bid be?

b. Assumed there was the important delag between the contracts. Throughout this time, personnel and equipment were reassigned to other projects. Describe how this affects the subsequent bid?