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Decision Analysis Case Study

FREEMARK ABBEY
WINERY
Khurram Masoods section

HLCC Consulting Inc.


Julian Hong
Nicolas Liao
Alan Chen
Cheng-Chieh Chao

Decision Basis

Information

Mr. Jaegers Alternatives

Harvest now or later


Use detector or not
Buy spores or not
Sell in bottle or bulk

Mr. Jaegers Preferences

Probability of rain, mold formation, acidity, sugar level, wine price,


reputation value, detector accuracy, spores effectiveness,
immigration law

Prefers more money than less


Cares about reputation

Uncertainties

Probability of rain, mold formation, acidity, sugar level

Decision Diagram
Detector/
No Detector

Rain/
No Rain

Detector
Prediction
Acidity Level
Harvest/
Not harvest

Spores/
No Spores

Botrytise/
Thin wine
Sugar Level

Immigration Law
Passed/Failed

Bottle/
Not Bottle
Value $

Decision Tree
Harvest Now

Immigration Law
Passed
Rain

Immigration Law
Failed
Immigration Law
Passed

Buy Spores

No Rain
Immigration Law
Failed

Mold Develops
Mold Develops
Low
Acidity
>= 25%
Normal
Sugar
Acidity
< 25%
Sugar
Low
Acidity
>= 25%
Sugar
< 25%
Sugar
Mold Develops
Sell Wine In Bulk
No Mold
Sell Wine Case
Mold Develops
Sell Wine In Bulk
No Mold
Sell Wine Case
Low
Acidity
>= 25%
Normal
Sugar
Acidity
< 25%
Sugar
Low
Acidity
>= 25%
Normal
Sugar
Acidity
< 25%
Sugar
Normal
Acidity

Do Not Rent
Weather Detector
Immigration Law
Passed

Harvest Later
Rain

Immigration Law
Failed

Do Not
Buy Spores

Immigration Law
Passed
No Rain
Immigration Law
Failed

Harvest Now
Immigration Law
Passed
Rain

Immigration Law
Passed

Buy Spores
Says
Rain

Immigration Law
Failed

Mold Develops
Mold Develops
Low
Acidity
Normal
Acidity

No Rain
Immigration Law
Failed

Low
Acidity

>= 25%
Sugar
< 25%
Sugar

>= 25%
Sugar
< 25%
Sugar
Mold Develops
Sell Wine In Bulk
No Mold
Sell Wine Case
Mold Develops
Sell Wine In Bulk
No Mold
Sell Wine Case
Low
Acidity
>= 25%
Normal
Sugar
Acidity
< 25%
Sugar
Low
Normal
Acidity

Rent
Weather
Detector
Immigration Law
Passed

Harvest Later
Rain

Immigration Law
Failed

Do Not
Buy Spores

Immigration Law
Passed
No Rain
Immigration Law
Failed

Acidity
Normal
Acidity

>= 25%
Sugar
< 25%
Sugar

Harvest Now

Immigration Law
Passed
Rain

Immigration Law
Passed

Buy Spores
Says
No
Rain

Immigration Law
Failed

Mold Develops
Mold Develops
Low
Acidity
Normal
Acidity

No Rain
Immigration Law
Failed

Low
Acidity
Normal
Acidity

Immigration Law
Passed

Harvest Later
Rain

Immigration Law
Failed

Do Not
Buy Spores

Immigration Law
Passed

Immigration Law
Failed

< 25%
Sugar

>= 25%
Sugar
< 25%
Sugar

Mold Develops
Sell Wine In Bulk
No Mold

Sell Wine Case

Mold Develops
Sell Wine In Bulk
No Mold
Low
Acidity
Normal
Acidity

No Rain

>= 25%
Sugar

Low
Acidity
Normal
Acidity

Sell Wine Case

>= 25%
Sugar
< 25%
Sugar
>= 25%
Sugar
< 25%
Sugar

Delay the harvest and buy spores, but at


a probability of rain greater than 45%,
use the detector

Use the detector, delay the harvest, but if the


probability of spores exceeds 85.6%, do not
buy the spores

Regardless of the probability of low


acidity, always use the detector, harvest
later, and buy spores.

No turning
point!

Regardless of sugar probability,


always use the detector, delay
harvest, and buy spores.

No turning
point!

Regardless of immigration probability,


always use the detector, delay the
harvest, and buy the spores.

No turning
point!

Value of the superDoppler


(Perfect Information)

The value of the detector is


$6874.64; thus it is worth anything up until
this point

Value of Mr. Borzs Spores


(Control)

The value of the spores is:


$22400.93; thus it is worth anything up until
this point