Freemark Abbey Winery Case Study Analysis

Introduction

This case study is about the company that produces a wine called Free mark Abbey Winery. The company was founded in 1886 by Josephine Marlin Tychson and it was located in Napa Valley, California. It usually produces 25,000 cases of wine annually, and each case contains twelve bottles of wine. The company won a few competitions because of its great quality and taste, such as: New York Wine Tasting of 1973: a wine competition of 23 California and few more.

Wine is produced by fermenting the sugar from fruits, and then it needs to be stored in barrels for a year or more than a year, until it gets ready to be consumed. However, barrels used for aging is essential as it manipulates the taste of wine; therefore, barrels chosen for aging is based on customer demand and taste. The major goal is to produce the best wine, which has a balance of sugar and acidity so that consumers like the wine.

Problem statement

The problem revolves around the decision that needs to be made for producing Riesling, which is a famous brand of wine called Johannesburg Riesling,which was produced in 1973. It is produced when botrytis mold that is a type of fungus; attacks the ripe Riesling grapes. In 1976, William Jaeger, one of the company’s membershad to make decision regarding whether to harvest the wine or not harvesting when storm is probable.

Case facts

For decision making; there are two options available for a company, which are: whether to harvest the wine orto not harvest. In both the situations; available facts are that if company opts to harvest the wine then it would be able to earn a revenue of ($2.00 + $ 0.85) = $ 2.85 per bottle and if the fungus hits the grape skin; the revenue would increase by $ 5.15, making the revenue as $8 per bottle. However, if the company doesn’t opt for harvesting with a probability of 40%, with revenue of $3.5 per bottle for a good wine and light wine; it could be sold for $3 with the probability of 40%.Lastly, low acid wine would earn revenue of $ 2.5, with the probability of 20%. Moreover, if there is not any harvest and mold doesn’t get produced, price of light wine would decline by $ 1, which means that the revenue will be only $2 per bottle………………………………..

 

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