Free Mark Abbey Winery

Decision Tree

Free Mark Abbey Winery

CASE SUMMARY

Decision: Should William Jaeger harvest the Riesling grapes immediately , or

leave them on vines despite the approaching storm?

Data: 1000 cases of Riesling. ( 12000 bottles) Chance of rainstorm- 50%

A) If immediately harvested without waiting for rainstorm

o Rate per bottle= $ 2.85 ( back calculated from not bottled rate)

B) If waited for rainstorm

If Rainstorm Hits o chance of botrytis mold= 40% o Rate per bottle (if botrytis mold does not form)= $2 o If not bottled, Rate (if botrytis mold does not form)= $2/2= $1 o Rate per bottle (if botrytis mold forms)= $8 o if botrytis mold forms , reduction in volume= 30% If Rainstorm does not Hit o Chance of 25% Sugar = 40%, rate per bottle= $3.5 o Chance of 20% Sugar = 40%, rate per bottle= $3.0 o Chance of <19% Sugar= 20%, rate per bottle= $2.5 Calculations:EMV(immediate harvest) = 2.85X 12000= $34200 EMV(wait for Rainstorm) =$35640 or $39240

Decision Tree

Now let us make decision tree:-

DECISION:-

CONCLUSION AS PER EMV CALCULATIONS

EMV(wait for Rainstorm) is more , So It is clear

that William Jaeger should leave grapes on vines despite the approaching storm