Freemark Winery Case

To: Michael Giberson, BECO 4310-011

From: Haley Kirby

Date: January 29, 2017

Re: Freemark Abbey Winery Case

In the Freemark Abbey Winery Case, Mr. Jaegar has to make the decision to harvest immediately or wait and see for a storm to harvest the wine. The best decision in this situation is to wait and see for a storm to harvest.

After evaluating all costs and options, harvesting after the storm would help with having a larger profit for his company. The storm can bring possible harmful factors, but Mr. Jaegar has a better financial advantage if he waits it out. Yielding can create many more benefits in the long run. Wholesale prices measure the prices of goods before the retail level.

Table 1 summarizes the wholesale prices for the bulk grapes, bulk wines, and bottled if we were to harvest immediately. The weighted price for this category would turn out to be $2.85. The next category is the wait and see option, which is broken up into two tables to explain if a storm did hit or did not hit since there was a 50/50 chance of the rain. Table 2 summarizes if he were to wait and see with a storm happening. In this table, it also explains the concentration percentages multiplied by the wholesale prices resulting in the total. Table 3 summaries if he were to wait and see with a storm not happening. In this table, it shows the concentration percentages multiplied by the wholesale pries again resulting in a total. With both tables weighted price totals combined results in $3.20.

Essentially since the option of wait and seeing results in being $0.35 more profitable than harvesting immediately; it makes sense to holdup the process. The maturity in harvesting later is also a big gain so that the wine’s taste is also into factor of it being better. Lastly, this is the best decision proven by decision factors and evaluating the facts to harvest after the storm whether there is one or not.