Freemark Abby

Topics: Decision theory, Decision tree, Risk Pages: 1 (300 words) Published: January 24, 2013
Dear Mr. Jaeger,

(Word Count – 238) Re: The decision to harvest now or wait After a through analysis, my view is that the best course of action is to wait to harvest. While making this decision, I have taken into account some of the probabilities that you have considered.

If you were to harvest now, the total outcome from the sale would be $34,200. If you wait, there is 50 % chance of rain. If it rains and botrytis mold is developed, the outcome will be $67,200. This better product may improve the reputation of your company. In case botrytis mold is not developed, the outcome will be between $12,900 and $25,800. There is also a slight risk to the reputation of the company. On the other hand, if it does not rain, the outcome will be between $30,000 and $42,000. For better illustration, please refer to the following decision tree.

2.85 * 12000 = $34,200 Harvest 25 % sugar Decision No Storm Wait 2 * (12000*1.075)= $25,800 No mold Storm 1 * (12000*1.075)= $12,900 8 * (12000*0.70)= $67,200 20 % sugar 3.00* 12000 = $36,000 2.50* 12000 = $30,000 3.50 * 12000 = $42,000

< 19 % sugar

No Mold Mold

Please keep in mind that my recommendation to delay harvest is based on the likelihood of many uncertain events such as 50 % chance of rain and 40 % chance of development of mold. Based on the analysis, it’s clear that the risk to wait rather than to harvest now is not too big. In my view it is worth taking this risk. In conclusion, it is my recommendation to delay harvest whether it rains or not. Please contact me if I can be of any other help. Happy Harvesting!!

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