Freemark Abbey Winery

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  • Topic: Decision tree, Decision theory, Decision analysis
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  • Published : July 8, 2012
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Decision Analysis Case Study

FREEMARK ABBEY WINERY
Khurram Masood’s section

HLCC Consulting Inc. Julian Hong Nicolas 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

Decision Diagram
Detector/ No Detector Detector Prediction Acidity Level Harvest/ Not harvest Spores/ No Spores Sugar Level Bottle/ Not Bottle Value $ Botrytise/ Thin wine Rain/ No Rain

Immigration Law Passed/Failed

Decision Tree

Harvest Now Immigration Law Passed Rain Immigration Law Failed Immigration Law Passed 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

Buy Spores

Do Not Rent Weather Detector Harvest Later Rain Immigration Law Failed Immigration Law Passed

Do Not Buy Spores No Rain

Immigration Law Passed

Immigration Law Failed

Harvest Now Immigration Law Passed Rain Immigration Law Failed Immigration Law Passed No Rain Immigration Law Failed Rent Weather Detector Harvest Later Rain Immigration Law Failed Immigration Law Passed Low Acidity Normal Acidity Mold Develops Mold Develops Low Acidity Normal Acidity

Buy Spores

Says Rain

>= 25% Sugar < 25% Sugar

Do Not Buy Spores No Rain

Immigration Law Passed

>= 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 Normal Acidity >= 25% Sugar < 25% Sugar

Immigration Law Failed

Harvest Now Immigration Law Passed Rain Immigration Law Failed Immigration Law Passed No Rain Immigration Law Failed Low Acidity Normal Acidity Immigration Law Passed Rain Immigration Law Failed Mold Develops Sell Wine In Bulk No Mold Sell Wine Case Do Not Buy Spores No Rain Immigration Law Failed Immigration Law Passed Low Acidity Normal Acidity Low Acidity Normal Acidity >= 25% Sugar < 25% Sugar >= 25% Sugar < 25% Sugar >= 25% Sugar < 25% Sugar Sell Wine In Bulk No Mold Sell Wine Case Mold Develops Mold Develops Low Acidity Normal Acidity

Buy Spores Says No Rain

>= 25% Sugar < 25% Sugar

Mold Develops

Harvest Later

Delay the harvest and buy spores, but at a probability of rain greater than 45%, use the detector Sensitivity to Probability of Rain
80000 70000 60000
Revenue

50000 40000 30000 20000 10000 0 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00

Rain No rain

Probability of Rain No Detector, Harvest Now No Detector, Delay Harvest, No Spores Use Detector, Delay Harvest, Buy Spores No Detector, Delay Harvest, Buy Spores Use Detector, Harvest Now Use Detector, Delay Harvest, No Spores

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
70000 60000 50000
Revenue

40000 30000 20000 10000 0 0.10

Mold No mold
0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00

Probability of Mold No Detector, Harvest Now No Detector, Delay Harvest, No Spores Use Detector, Delay Harvest, Buy Spores No Detector, Delay Harvest, Buy Spores Use Detector, Harvest Now Use Detector, Delay Harvest, No Spores

Regardless of the probability of low acidity, always use the detector, harvest later, and buy spores. Sensitivity to Probability of Low Acidity
60000 50000 40000 Revenue 30000 20000...
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