Production of Wines

POPULATION

This case study highlights how an organisation based on production of wines can expand its business through an analysis of the market in order to identify the best way of expanding its business.

Given some options to development and expansion of market and products of a business, a sensitivity analysis must be done in order to study changes on management that can occur due to these options (Model Building: Break-even Analysis). A sensitivity analysis is able to analyse management science models and consequently this analysis can identify how the model may react to different options. For example, in North Land Winery case study, a sensitivity analysis of the two options provided ought to be developed in order to find out the best option that will bring better profits and low costs. Furthermore, during a process of development of a product, companies do Break-Even Analysis, which is a vital tool in order to stablish the capacity necessary to reach profitability (Heizer and Render 2011, p. 324). In other words, Break-Even is an analysis in number of units or volume of sales and the costs generated by this volume of sales that can achieve a profit margin. In this analysis, companies find out the Break-Even point, which is the point that amounts of revenue are equal to the amount of costs. After this point, companies begin to have a profit. According to Jacobs 2011, the break-even chart demonstrates possible profits or losses that can happen due to the revenue of a company (Jacobs & Chase 2011, p. 164). Moreover, a forecast demand is an important point that it is necessary to evaluate because the capacity and consequently the profit depend on the forecast demand. According to Horn et al (2013, pp. 232-233), an important and accurate forecasting tool is the Prediction Markets (PMs) that aggregate and collect information of a specific product market and predict future events.