Decision Analysis Case Study FREEMARK ABBEY WINERY Khurram Masood’s section HLCC Consulting Inc. Julian Hong Nicolas Liao Alan Chen Cheng-Chieh Chao
Decision Analysis Case Study
FREEMARK ABBEY WINERYKhurram Masood’s section
HLCC Consulting Inc.Julian HongNicolas Liao Alan Chen Cheng-Chieh Chao
Decision Basis Information
Probability of rain, mold formation, acidity, sugar level, wine price, reputation value, detector accuracy, spores effectiveness, immigration law
Mr. Jaeger’s Alternatives Harvest now or later Use detector or not Buy spores or not Sell in bottle or bulk
Mr. Jaeger’s Preferences Prefers more money than less Cares about reputation
Uncertainties Probability of rain, mold formation, acidity, sugar level
Harvest/ Not harvest
Value $
Rain/No Rain
Acidity Level
Sugar Level
Botrytise/Thin wine
Bottle/Not Bottle
Detector/No Detector
Spores/No Spores
Immigration Law Passed/Failed
DetectorPrediction
Decision Diagram
Do Not Rent Weather Detector
Buy Spores
Do Not Buy Spores
Harvest Later
Harvest NowImmigration LawPassed
Immigration LawFailed
Rain
No Rain
Mold Develops
No Mold
LowAcidity
NormalAcidity
>= 25% Sugar< 25% Sugar
Mold Develops
Mold DevelopsSell Wine In Bulk
Sell Wine Case
Immigration LawPassed
Immigration LawFailed
LowAcidity
NormalAcidity
>= 25% Sugar< 25% Sugar
Immigration LawPassed
Immigration LawFailed
Rain
No Rain
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
Immigration LawPassed
Immigration LawFailed
LowAcidity
NormalAcidity
>= 25% Sugar< 25% Sugar
No Mold
Mold DevelopsSell Wine In Bulk
Sell Wine Case
Decision Tree
Rent WeatherDetector
SaysRain
Buy Spores
Do Not Buy Spores
Harvest Later
Harvest NowImmigration LawPassed
Immigration LawFailed
Rain
No Rain
Mold Develops
No Mold
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
Mold Develops
Mold DevelopsSell Wine In Bulk
Sell Wine Case
Immigration LawPassed
Immigration LawFailed
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
Immigration LawPassed
Immigration LawFailed
Rain
No Rain
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
Immigration LawPassed
Immigration LawFailed
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
No Mold
Mold DevelopsSell Wine In Bulk
Sell Wine Case
SaysNoRain
Buy Spores
Do Not Buy Spores
Harvest Later
Harvest NowImmigration LawPassed
Immigration LawFailed
Rain
No Rain
Mold Develops
No Mold
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
Mold Develops
Mold DevelopsSell Wine In Bulk
Sell Wine Case
Immigration LawPassed
Immigration LawFailed
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
Immigration LawPassed
Immigration LawFailed
Rain
No Rain
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
Immigration LawPassed
Immigration LawFailed
LowAcidity
NormalAcidity
>= 25% Sugar
< 25% Sugar
No Mold
Mold DevelopsSell Wine In Bulk
Sell Wine Case
Delay the harvest and buy spores, but at a probability of rain greater than 45%, use the detector
Sensitivity to Probability of Rain
0
10000
20000
30000
40000
50000
60000
70000
80000
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Probability of Rain
Rev
enu
e
No Detector, Harvest Now No Detector, Delay Harvest, Buy Spores
No Detector, Delay Harvest, No Spores Use Detector, Harvest Now
Use Detector, Delay Harvest, Buy Spores Use Detector, Delay Harvest, No Spores
RainNo rain
Use the detector, delay the harvest, but if the probability of spores exceeds 85.6%, do not buy the spores
Sensitivity to Probability of Mold
0
10000
20000
30000
40000
50000
60000
70000
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Probability of Mold
Rev
enu
e
No Detector, Harvest Now No Detector, Delay Harvest, Buy Spores
No Detector, Delay Harvest, No Spores Use Detector, Harvest Now
Use Detector, Delay Harvest, Buy Spores Use Detector, Delay Harvest, No Spores
MoldNo mold
Regardless of the probability of low acidity, always use the detector, harvest later, and buy spores.
Sensitivity to Probability of Low Acidity
0
10000
20000
30000
40000
50000
60000
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Probability of Low Acidity
Rev
enue
No Detector, Harvest Now No Detector, Delay Harvest, Buy Spores
No Detector, Delay Harvest, No Spores Use Detector, Harvest Now
Use Detector, Delay Harvest, Buy Spores Use Detector, Delay Harvest, No Spores
No turning point!
Regardless of sugar probability, always use the detector, delay harvest, and buy spores.
No turning point!
Sensitivity to Probability of >=25% Sugar
0
10000
20000
30000
40000
50000
60000
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Probability of >=25% Sugar
Rev
enu
e
No Detector, Harvest Now No Detector, Delay Harvest, Buy Spores
No Detector, Delay Harvest, No Spores Use Detector, Harvest Now
Use Detector, Delay Harvest, Buy Spores Use Detector, Delay Harvest, No Spores
Regardless of immigration probability, always use the detector, delay the harvest, and buy the spores.
Sensitivity to Probability of Immi. Law Pass
0
10000
20000
30000
40000
50000
60000
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Probability of Immi. Law Pass
Rev
enu
e
No Detector, Harvest Now No Detector, Delay Harvest, Buy Spores
No Detector, Delay Harvest, No Spores Use Detector, Harvest Now
Use Detector, Delay Harvest, Buy Spores Use Detector, Delay Harvest, No 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. Borz’s Spores (Control) The value of the spores is:
$22400.93; thus it is worth anything up until this point