Freemark Abbey Winery Case Study Solution
This case would be used to find out the total revenue in case of harvesting and probability of fungus to spread on grape skin as well as the overall revenue that the company can earn in this situation. Moreover, if there is a change of probability to 40% for good wine and other types of wines are distributed equally, how it would impact the overall revenues and make the decision regarding how to maximize the revenues.
Question 1
If the Riesling grapes are harvested before the storm arrives; Mr. Jaeger may choose to sell a bottle for $ 2.85 or sell wine and grapes directly in bulk. If sold for a bottle for $ 2.85; the rent would be = 1000 * 12 * $ 2.85 = $ 34,200. (If you sell wine and grapes directly in bulk, Mr. Jaeger will receive half the revenue, which is about $ 1,000 * 12 * $ 2 * 1/2 = $ 12,000.)
For information on the weather forecast; Jaeger is willing to pay up to $ 0.85 per bottle. This is because paying $ 0.85 per bottle will equal the worst reward of harvesting later and the reward of harvesting now. Jaeger would become indifferent between the two. Therefore, any amount under $ 0.85 per bottle would be doable for Jaeger.
Besides, it is also important to analyze the current financial situation of the company. Jaeger should analyze whether the company is financially sound to determine the price of the weather information and bear the loss that gets invited with rainfall, which prevents the development of botrytis mold. If your business is highly leveraged; you can't afford to pay too much for information. Another important factor to be considered is the cost per bottle. If the cost is low, the margin, when the price is $ 2.85 per bottle, is high. In this case, the company can afford to pay additionally for the weather forecast...............................
This is just a sample partical work. Please place the order on the website to get your own originally done case solution.
Related Case Solutions & Analyses:
Massachusetts General Hospital and the Enbrel Royalty
Toyota: Demand Chain Management
Symantec vs. McAfee: Competing in the Consumer Anti-Virus Industry
Caja Espana: Managing the Branches to Sell (A)
Heather Evans: Question and Answer Session with an MBClass Video
Alaska Airlines: Navigating Change
BLUNTLY Media: A Private Company Valuation
Negotiating Social Value – Crisis at Fuel Safe: General Instructions (Participant Guide)
Can Nice Guys Finish First?
VITAS: Innovative Hospice Care Case
