Following are the facts from the case
• Freemake Abbey was located in St. Helena California, in the northern Napa Valley which is an ideal climate to grow grapes.
• The winery produced the only premium quality of wines from the best grapes varieties.
• There are in total four types of wine manufactured they are
1. Cabernet Sauvignon
4. Petite Syrah
• There is 50% chance of storm and if the storm comes only with light rain there is 40 % chance that BOTRYOTIS CINEREA to form on the grape skin and on the other hand if storm didn’t come then grapes have enough time to attend the ripping stage and attend sugar level of 20%, 25% or higher
• Verities of wines is mainly decided by the decision taken during vinification and ratio of sugar and acidity level present in fruit at the time of harvesting.
At Freemark Abbey, Winery William Jaeger is more concern about the quality of the product over the quantity. It is hard to find the proper balance between the level of Sugar and Acidity in Grapes but it can be achieved with favourable weather condition. William is now facing a dilemma either to harvest before the expected storm or to wait for the ripping of fruit to get the standard quality under the above-stated conditions.
• The First the unpredictable Weather is causing the main issue as there is no proper knowledge regarding the arrival storm and as per the scenario the chance of the was just 50% which is not a big lead to forecast a storm
• The second problem is that Jager has a brand value with him he needs to take a big decision whether to avoid short-term loss by compromise with quality or to face a risk of short-term loss and maintain the quality and the Brand Value.
Decision Objectives :
There could be two approaches for the solution of this problem
1. Short-Term Approach
It is a zero financial risk decision in the short run as Jaeger will be compromising with the quality of the product by harvesting before the storm but this will lead at a break-even point. This decision is generally good for the Financially unstable firm and should be taken as a last option
2. Long-term approach
It is a more risky option to opt for as in this decision he will wait for the fruits to get ripe then after he is going to harvest. This decision is totally dependent on the storm, If the storm is in favour then the profit will be double folded but in an adverse case, there may be a loss also. So, this long-term decision is risky but have a better chance of getting a positive outcome