Example: Austin Auto Auction

• Question:

Develop the mathematical model that will give the starting bid (B) for a car in terms of the car's original price (P), current age (A) and mileage (M).

• Answer:

The expected winning bid can be expressed as:

P - 800(A) - .025(M)

The entire model is:

B = .7(expected winning bid) or

B = .7(P - 800(A) - .025(M)) or

B = .7(P) - 560(A) - .0175(M)

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