Following are the facts from the case
• Freemark Abbey was located in St. Helena California, in the northern Napa Valley which is an ideal climate to grow grapes.
• The winery produced 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 proper balance between the level of Sugar and Acidity in Grapes but it can be achieved with favourable weather condition. William is now feccing a dialima either to harvest before the expected storm or to wait for the ripping of fruit to get the standard quality under the abobe 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 need to take a big decision weather to avoide short turm 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 approach for the solution of this problem
1. Short Term Approach
It is a zero financial risk decision in short run as jaeger will be compromising with the quality of the product but will be at break-even point as this decision is better for the Finencial instable firm and should be taken as a last option
2. Long term approach
It is more risky option to opt for as this decision is very much dependent over the Storm . If storm is in favour then the profit will be double folded but in adverse case