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Freemark Abbey Case

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Freemark Abbey

Strategic Decision Making

Problem

Freemark Abbey has an invaluable reputation as a winery that produces high quality, premium wines from the best variety of grapes. The quality and brand built throughout the years is the cumulative result of making well thought out, informed decisions that have earned Freemark Abbey the respect and demand in the winemaking industry.

Several considerations are given in producing a consistently high quality product. The seeds, soil, weather, maturation time of the grapes, timing of the harvest, fermentation time, acidity and sugar levels all play an important role in product delivery. Careful consideration must be given in order to uphold one of Freemark Abbey's greatest strengths, it's reputation.

For this decision, we considered multiple points in the decision making process, considering the probability of rain, sugar and acidity levels, as well as the possibility of botrytis mold forming after a potential rainstorm. With reports of a rainstorm ahead with a 50% chance of it striking the winery, we constructed a decision tree and analysis to help guide the decision process and support the resulting recommendation.

Initially, Mr. Jaeger is faced with two options; harvest the grapes immediately or wait for the storm to occur at a 50% probability. The options provide very different outcomes that will ultimately affect the winery's earnings and brand. If the grapes are harvested immediately, there is very list risk involved and they will earn $2.85 per bottle, or $34,200 for the 12,000 bottles they plan to make in the harvest. This option does't allow the opportunity to produce a premium Riesling wine, and prevents the profits from it as well.

The other decision would be to wait for the storm. If the storm occurred it creates the possibility of botrytis mold forming (40% probability) and would enhance…...

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