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Problem 13-13 (Algorithmic) Seneca Hill Winery recently purchased land for the purpose of establishing a new vineyard, Management is considering two variaties of white grapes for the new vineyard: Chardonnay and Riesling. The Chardonnay grapes would be used to produce a dry Chardonnay wine, and the Riesling grapes would be used to produce a semidry Riesling wine. It takes approximately four years from the time of planting before new grapes can be harvested. This length of time creates a great deal of uncertainty concerning future demand and makes the decision about the type of grapes to plant difficult. Three possibilities are being considered: Chardonnay grapes only: Riesling grapes only, and both Chardonnay and Riesling grapes. Seneca management decided that for planning purposes it would be adequate to consider only two demand possibilities for each type of wine: strong or weak. With two possibilities for each type of wine, it was necessary to assess four probabilities. With the help of some forecasts in industry publications, management made the following probability assessments: Riesling Demand Chardonnay Demand Weak Strong Weak 0.50 Strong 0.20 0.25 Reverve projections show an annual contribution to profit of $20,000 if Seneca Hill only plants Chardonnay grapes and demand is weak for Chardonnay wine, and $80,000 Seneca only plants Chardonnay grapes and demand is strong for Chardonnay wine. If Seneca only plants Riesling grapes, the annual profit projection is $20,000 il demand is weak for Resing grapes and $40,000 demand is strong for Riesing grapes. If Seneca plants both types of grapes, the annual profit projections are shown in the following table Riesling Demand Chardonnay Demand Weak Strong $24,000 $35,000 Strong $20.000 565,000 0.05 Weak a. What is the decision to be made, what is the chance event, and what is the consequence? Identify the alternatives for the decisions and the possible outcomes for the chance events. Calculator 03 (0) Weak for Chardonnay Werk for Chardonnay 0.35 20 20 055 Weak Week Weak for Chardonnay, Weak for Riesling 24 0.05 2 Weak for Chardonnay. Weak for Ritalin 005 24 Werk for Riesling 40 Week for Riesling 0.75 20 025 Wash for Chardonnay Strong for Riesling 0.30 35 Week for Chudonnay, Strong for Riesling 020 1 Strong for Chardonnay, Weak for Ransling 020 28 Strong for Chardonnay. Work for Riesling 0.30 35 Strong for Chandonnay 30 Strong Stonfo Chudney Stone for Ring 65 025 Stront for Rising 20 Strong Chardonnay 80 0.45 Strong for Chudonnay Stross for Ring 65 0.25 Strong or Rerlin 40 025 (1) (iv) Wosk for Chardonnay 20 Weck for Chardonnay 055 20 035 Plant Chardonnay Plant Chardonnay Strong for Chardonnay 0.45 80 Strong for Chardonnay 0.45 80 Wook for Chardonnay, Wook for Riesting 005 24 Weal for Chardonnay, Weak for Ritsling 0.05 24 Wesk for Chardonnay. Strong for Riesling 050 35 Wook for Chardonnay, Strong ft Riesling 0.20 20 Plant both Plant both Strong for Chardonnay, Work for Riesling 0.20 28 Strong for Chardonnay Week for Riesling 030 35 Strong for Chardonnay Strong for Riesling 65 0.25 Strong for Chardonnay, Strong for Riesling 65 0.25 Wesk for Riesling 20 0.25 Weak for Riesling 0.25 20 Plast Riesling Plant Riesling Calculator 80 30 Strong for Chardonnay 0.45 Work for Chardonnay, Weak for Riesling 003 Strong for Chardonnay 0.45 Wod for Chardonny Week for Riesling 005 24 24 Weal for Chardonnay, Strong for Riesling 030 35 Work for Chendosny, Strong for Riesling 020 Plant both grapes Plant both spel 3 Strong for Chardonnay, Werk for Riesling 0.20 20 Strong for Chardonnay Wask for Rising 050 35 Strong for Chardonnay. Strong for Riesling 65 65 0.25 Strong for Chardonnay Strong for Riesling 0.25 Wesk for Riesling 0.25 Weak for Riesling 0.25 20 20 Plast Riesling Plant Riesling 4 Strong for Riesling 0.75 Strong for Riesling 0.75 Weak for Riesling 0.25 20 Wesk for Riesling 0.25 20 Plant Riesling Plant Riesling Stront for Riesling 0.75 40 Strong for Riesling 0.75 40 Use the expected value approach to recommend which alternative Seneca Hill Winery should follow in order to maximize expected annual profit. Suppose management is concerned about the probability assessments when demand for Chardonnay wine is strong. Some believe it is likely for Riesling demand to also be strong in this case. Suppose the probability of strong demand for Chardonnay and weak demand for Riesling is 0.10 and that the probability of strong demand for Chardonnay and strong demand for Riesling is 0.35. How does this change the recommended decision? Assume that the probabilities when Chardonnay demand is weak lore still 0.05 and 0.50. Choose the correct alternative e. Other members of the management team expect the Chardonnay market to become saturated at some point in the future, causing a fall in prices. Suppose that the annual profit projections fall to $60,000 when demand for Chardonnay is strong and Chardonnay grapes only are planted. Using the original probability assessments, determine how this change would affect the optimal decision. Choose the correct alternative Plant Riesling 4 Str c. Use Tree (1) d value approach to recommend Tree (ii) Tree (iii) d. Supe ement is concerned about the pro case Tree (iv) he probability of strong demand fo Riesli How does this change the recomm e. Other members of the management team expect t projections fall to $60,000 when demand for Chard affect the optimal decision. Choose the correct alte Plant Riesling C. Use the expected value approach to recomme >d. Plant Chardonnay nt is concerned about the obability of strong demar Plant both grapes does this change the rec Plant Riesling e. Other members of the management team expe projections fall to $60,000 when demand for CH affect the optimal decision. Choose the correct c. Use the expected value approach to recommer >) d. Suppose management is concerned about the case. Suppose the probability of strong demand Riesling is 0.35. How does this change the reco e. Plant Chardonnay he management teant expec 0,000 when demand for Cha Plant both grapes cision. Choose the correct a Plant Riesling c. Use the expected value approach to rec > d. Suppose management is concerned abou case. Suppose the probability of strong d Riesling is 0.35. How does this change th Plant Chardonnay e. Plant both grapes le management team 0,000 when demand fo cision. Choose the corr Plant Riesling Problem 13-13 (Algorithmic) Seneca Hill Winery recently purchased land for the purpose of establishing a new vineyard. Management is considering two varieties of white grapes for the new vineyard: Chardonnay and Riesling. The Chardonnay grapes would be used to produce a dry Chardonnay wine, and the Riesling grapes would be used to produce a semidry Riesling wine. It takes approximately four years from the time of planting before new grapes can be harvested. This length of time creates a great deal of uncertainty concerning future demand and makes the decision about the type of grapes to plant difficult. Three possibilities are being considered: Chardonnay grapes only; Riesling grapes only; and both Chardonnay and Riesling grapes. Seneca management decided that for planning purposes it would be adequate to consider only two demand possibilities for each type of wine: strong or weak. With two possibilities for each type of wine, it was necessary to assess four probabilities. With the help of some forecasts in industry publications, management made the following probability assessments: Riesling Demand Chardonnay Demand Weak Strong Weak 0.05 0.50 Strong 0.20 0.25 Revenue projections show an annual contribution to profit of $20,000 if Seneca Hill only plants Chardonnay grapes and demand is weak for Chardonnay wine, and $80,000 ir Seneca only plants Chardonnay grapes and demand is strong for Chardonnay wine. If Seneca only plants Riesling grapes, the annual profit projection is $20,000 If demand is weak for Riesling grapes and $40,000 if demand is strong for Riesling grapes. If Seneca plants both types of grapes, the annual profit projections are shown in the following table: Riesling Demand Chardonnay Demand Weak Strong Weak $24,000 $35,000 Strong $28.000 365.000 a. What is the desion to be made, what is the chance event, and what is the consequence? Identify the alternatives for the decisions and the possible outcomes for the chance events Ch. 13 Calculator b. Choose the correct decision tree. (0) Weak for Chardonnay 0.55 Weak Weak for Chardonnay, Weak for Riesling 0.05 Weak for Riesling 0.25 Weak for Chardonnay, Strong for Riesling 050 Strong for Chardonnay, Weak for Riesling 0.20 JUL 22 v2.0 My Home Weak for Chardonnay 20 055 Weak Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Riesling 0.25 40 Weak for Chardonnay, Strong for Riesling 050 35 1 > Strong for Chardonnay, Weak for Riesling 0 20 28 Strong Strong for Chardonnay 80 0.45 Strong for Chardonnay, Strong for Riesling 65 0.25 Strong for Riesling 20 0.75 Assignment Score: 0.0% 22 Weak for Chardonnay 20 0.55 Weak 2 Weak for Chardonnay, Weak for Riesling 24 0.05 Weak for Riesling 0.75 20 Weak for Chardonnay, Strong for Riesling 0.20 28 Strong for Chardonnay, Weak for Riesling 050 35 Strong Strong for Chardonnay 80 0.45 Strong for Chardonnay, Strong for Riesling 65 0.25 Strong for Riesling 40 0.25 Previous Next > Save and Exit Submit Assignment for Grading I A My Home Weak for Chardonnay 055 20 Plant Chardonnay Strong for Chardonnay 0.45 80 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.50 35 Plant both grapes 3 Strong for Chardonnay, Weak for Riesling 0.20 28 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 0.25 20 Plant Riesling Assignment Score: 0.0% 22 Tant Chardonnay Strong for Chardonnay 0.45 80 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.50 35 Plant both grapes Strong for Chardonnay, Weak for Riesling 020 28 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 0.25 20 Plant Riesling Strong for Riesling 40 0.75 gnment Score: 0.0% JUL D 22 Weak for Chardonnay 055 20 Plant Chardonnay 2 80 Strong for Chardonnay 0.45 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.20 28 Plant both grapes 3 Strong for Chardonnay, Weak for Riesling 35 0.50 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 20 0.25 Plant Riesling 4 Previous Next Strong for Chardonnay 0.45 80 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.20 28 Plant both grapes 3 Strong for Chardonnay, Weak for Riesling 35 0.50 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 0.25 20 Plant Riesling Strong for Riesling 0.75 40 Previous O A Strong for Riesling 40 0.75 C. Use the expected value approach to recommend which alternative Seneca Hill Winery should follow in order to maximize expected annual profit. d. Suppose management is concerned about the probability assessments when demand for Chardonnay wine is strong. Some believe it is likely for Riesling demand to also be strong in this case. Suppose the probability of strong demand for Chardonnay and weak demand for Riesling is 0.10 and that the probability of strong demand for Chardonnay and strong demand for Riesling is 0.35. How does this change the recommended decision? Assume that the probabilities when Chardonnay demand is weak are still 0.05 and 0,50. Choose the correct alternative. > e. Other members of the management team expect the Chardonnay market to become saturated at some point in the future, causing a fall in prices. Suppose that the annual profit projections fall to $60,000 when demand for Chardonnay is strong and Chardonnay grapes only are planted. Using the original probability assessments, determine how this change would affect the optimal decision. Choose the correct alternative. c. Use the expected value approach to recommend which alternative Senec maximize expected annual profit. d. Plant Chardonnay ht is concerned about the probability assessments w ely for Riesling demand to also be strong in this case Plant both grapes weak demand for Riesling is 0.10 and that the proba Plant Riesling Liesling is 0.35. How does this change the recommend mand is weak are still 0.05 and 0.50. Choose the co e. Other members of the management team expect the Chardonnay market future, causing a fall in prices. Suppose that the annual profit projections Chardonnay is strong and Chardonnay grapes only are planted. Using the how this change would affect the optimal decision. Choose the correct alt 22 Problem 13-13 (Algorithmic) Seneca Hill Winery recently purchased land for the purpose of establishing a new vineyard, Management is considering two variaties of white grapes for the new vineyard: Chardonnay and Riesling. The Chardonnay grapes would be used to produce a dry Chardonnay wine, and the Riesling grapes would be used to produce a semidry Riesling wine. It takes approximately four years from the time of planting before new grapes can be harvested. This length of time creates a great deal of uncertainty concerning future demand and makes the decision about the type of grapes to plant difficult. Three possibilities are being considered: Chardonnay grapes only: Riesling grapes only, and both Chardonnay and Riesling grapes. Seneca management decided that for planning purposes it would be adequate to consider only two demand possibilities for each type of wine: strong or weak. With two possibilities for each type of wine, it was necessary to assess four probabilities. With the help of some forecasts in industry publications, management made the following probability assessments: Riesling Demand Chardonnay Demand Weak Strong Weak 0.50 Strong 0.20 0.25 Reverve projections show an annual contribution to profit of $20,000 if Seneca Hill only plants Chardonnay grapes and demand is weak for Chardonnay wine, and $80,000 Seneca only plants Chardonnay grapes and demand is strong for Chardonnay wine. If Seneca only plants Riesling grapes, the annual profit projection is $20,000 il demand is weak for Resing grapes and $40,000 demand is strong for Riesing grapes. If Seneca plants both types of grapes, the annual profit projections are shown in the following table Riesling Demand Chardonnay Demand Weak Strong $24,000 $35,000 Strong $20.000 565,000 0.05 Weak a. What is the decision to be made, what is the chance event, and what is the consequence? Identify the alternatives for the decisions and the possible outcomes for the chance events. Calculator 03 (0) Weak for Chardonnay Werk for Chardonnay 0.35 20 20 055 Weak Week Weak for Chardonnay, Weak for Riesling 24 0.05 2 Weak for Chardonnay. Weak for Ritalin 005 24 Werk for Riesling 40 Week for Riesling 0.75 20 025 Wash for Chardonnay Strong for Riesling 0.30 35 Week for Chudonnay, Strong for Riesling 020 1 Strong for Chardonnay, Weak for Ransling 020 28 Strong for Chardonnay. Work for Riesling 0.30 35 Strong for Chandonnay 30 Strong Stonfo Chudney Stone for Ring 65 025 Stront for Rising 20 Strong Chardonnay 80 0.45 Strong for Chudonnay Stross for Ring 65 0.25 Strong or Rerlin 40 025 (1) (iv) Wosk for Chardonnay 20 Weck for Chardonnay 055 20 035 Plant Chardonnay Plant Chardonnay Strong for Chardonnay 0.45 80 Strong for Chardonnay 0.45 80 Wook for Chardonnay, Wook for Riesting 005 24 Weal for Chardonnay, Weak for Ritsling 0.05 24 Wesk for Chardonnay. Strong for Riesling 050 35 Wook for Chardonnay, Strong ft Riesling 0.20 20 Plant both Plant both Strong for Chardonnay, Work for Riesling 0.20 28 Strong for Chardonnay Week for Riesling 030 35 Strong for Chardonnay Strong for Riesling 65 0.25 Strong for Chardonnay, Strong for Riesling 65 0.25 Wesk for Riesling 20 0.25 Weak for Riesling 0.25 20 Plast Riesling Plant Riesling Calculator 80 30 Strong for Chardonnay 0.45 Work for Chardonnay, Weak for Riesling 003 Strong for Chardonnay 0.45 Wod for Chardonny Week for Riesling 005 24 24 Weal for Chardonnay, Strong for Riesling 030 35 Work for Chendosny, Strong for Riesling 020 Plant both grapes Plant both spel 3 Strong for Chardonnay, Werk for Riesling 0.20 20 Strong for Chardonnay Wask for Rising 050 35 Strong for Chardonnay. Strong for Riesling 65 65 0.25 Strong for Chardonnay Strong for Riesling 0.25 Wesk for Riesling 0.25 Weak for Riesling 0.25 20 20 Plast Riesling Plant Riesling 4 Strong for Riesling 0.75 Strong for Riesling 0.75 Weak for Riesling 0.25 20 Wesk for Riesling 0.25 20 Plant Riesling Plant Riesling Stront for Riesling 0.75 40 Strong for Riesling 0.75 40 Use the expected value approach to recommend which alternative Seneca Hill Winery should follow in order to maximize expected annual profit. Suppose management is concerned about the probability assessments when demand for Chardonnay wine is strong. Some believe it is likely for Riesling demand to also be strong in this case. Suppose the probability of strong demand for Chardonnay and weak demand for Riesling is 0.10 and that the probability of strong demand for Chardonnay and strong demand for Riesling is 0.35. How does this change the recommended decision? Assume that the probabilities when Chardonnay demand is weak lore still 0.05 and 0.50. Choose the correct alternative e. Other members of the management team expect the Chardonnay market to become saturated at some point in the future, causing a fall in prices. Suppose that the annual profit projections fall to $60,000 when demand for Chardonnay is strong and Chardonnay grapes only are planted. Using the original probability assessments, determine how this change would affect the optimal decision. Choose the correct alternative Plant Riesling 4 Str c. Use Tree (1) d value approach to recommend Tree (ii) Tree (iii) d. Supe ement is concerned about the pro case Tree (iv) he probability of strong demand fo Riesli How does this change the recomm e. Other members of the management team expect t projections fall to $60,000 when demand for Chard affect the optimal decision. Choose the correct alte Plant Riesling C. Use the expected value approach to recomme >d. Plant Chardonnay nt is concerned about the obability of strong demar Plant both grapes does this change the rec Plant Riesling e. Other members of the management team expe projections fall to $60,000 when demand for CH affect the optimal decision. Choose the correct c. Use the expected value approach to recommer >) d. Suppose management is concerned about the case. Suppose the probability of strong demand Riesling is 0.35. How does this change the reco e. Plant Chardonnay he management teant expec 0,000 when demand for Cha Plant both grapes cision. Choose the correct a Plant Riesling c. Use the expected value approach to rec > d. Suppose management is concerned abou case. Suppose the probability of strong d Riesling is 0.35. How does this change th Plant Chardonnay e. Plant both grapes le management team 0,000 when demand fo cision. Choose the corr Plant Riesling Problem 13-13 (Algorithmic) Seneca Hill Winery recently purchased land for the purpose of establishing a new vineyard. Management is considering two varieties of white grapes for the new vineyard: Chardonnay and Riesling. The Chardonnay grapes would be used to produce a dry Chardonnay wine, and the Riesling grapes would be used to produce a semidry Riesling wine. It takes approximately four years from the time of planting before new grapes can be harvested. This length of time creates a great deal of uncertainty concerning future demand and makes the decision about the type of grapes to plant difficult. Three possibilities are being considered: Chardonnay grapes only; Riesling grapes only; and both Chardonnay and Riesling grapes. Seneca management decided that for planning purposes it would be adequate to consider only two demand possibilities for each type of wine: strong or weak. With two possibilities for each type of wine, it was necessary to assess four probabilities. With the help of some forecasts in industry publications, management made the following probability assessments: Riesling Demand Chardonnay Demand Weak Strong Weak 0.05 0.50 Strong 0.20 0.25 Revenue projections show an annual contribution to profit of $20,000 if Seneca Hill only plants Chardonnay grapes and demand is weak for Chardonnay wine, and $80,000 ir Seneca only plants Chardonnay grapes and demand is strong for Chardonnay wine. If Seneca only plants Riesling grapes, the annual profit projection is $20,000 If demand is weak for Riesling grapes and $40,000 if demand is strong for Riesling grapes. If Seneca plants both types of grapes, the annual profit projections are shown in the following table: Riesling Demand Chardonnay Demand Weak Strong Weak $24,000 $35,000 Strong $28.000 365.000 a. What is the desion to be made, what is the chance event, and what is the consequence? Identify the alternatives for the decisions and the possible outcomes for the chance events Ch. 13 Calculator b. Choose the correct decision tree. (0) Weak for Chardonnay 0.55 Weak Weak for Chardonnay, Weak for Riesling 0.05 Weak for Riesling 0.25 Weak for Chardonnay, Strong for Riesling 050 Strong for Chardonnay, Weak for Riesling 0.20 JUL 22 v2.0 My Home Weak for Chardonnay 20 055 Weak Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Riesling 0.25 40 Weak for Chardonnay, Strong for Riesling 050 35 1 > Strong for Chardonnay, Weak for Riesling 0 20 28 Strong Strong for Chardonnay 80 0.45 Strong for Chardonnay, Strong for Riesling 65 0.25 Strong for Riesling 20 0.75 Assignment Score: 0.0% 22 Weak for Chardonnay 20 0.55 Weak 2 Weak for Chardonnay, Weak for Riesling 24 0.05 Weak for Riesling 0.75 20 Weak for Chardonnay, Strong for Riesling 0.20 28 Strong for Chardonnay, Weak for Riesling 050 35 Strong Strong for Chardonnay 80 0.45 Strong for Chardonnay, Strong for Riesling 65 0.25 Strong for Riesling 40 0.25 Previous Next > Save and Exit Submit Assignment for Grading I A My Home Weak for Chardonnay 055 20 Plant Chardonnay Strong for Chardonnay 0.45 80 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.50 35 Plant both grapes 3 Strong for Chardonnay, Weak for Riesling 0.20 28 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 0.25 20 Plant Riesling Assignment Score: 0.0% 22 Tant Chardonnay Strong for Chardonnay 0.45 80 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.50 35 Plant both grapes Strong for Chardonnay, Weak for Riesling 020 28 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 0.25 20 Plant Riesling Strong for Riesling 40 0.75 gnment Score: 0.0% JUL D 22 Weak for Chardonnay 055 20 Plant Chardonnay 2 80 Strong for Chardonnay 0.45 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.20 28 Plant both grapes 3 Strong for Chardonnay, Weak for Riesling 35 0.50 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 20 0.25 Plant Riesling 4 Previous Next Strong for Chardonnay 0.45 80 Weak for Chardonnay, Weak for Riesling 0.05 24 Weak for Chardonnay, Strong for Riesling 0.20 28 Plant both grapes 3 Strong for Chardonnay, Weak for Riesling 35 0.50 Strong for Chardonnay, Strong for Riesling 65 0.25 Weak for Riesling 0.25 20 Plant Riesling Strong for Riesling 0.75 40 Previous O A Strong for Riesling 40 0.75 C. Use the expected value approach to recommend which alternative Seneca Hill Winery should follow in order to maximize expected annual profit. d. Suppose management is concerned about the probability assessments when demand for Chardonnay wine is strong. Some believe it is likely for Riesling demand to also be strong in this case. Suppose the probability of strong demand for Chardonnay and weak demand for Riesling is 0.10 and that the probability of strong demand for Chardonnay and strong demand for Riesling is 0.35. How does this change the recommended decision? Assume that the probabilities when Chardonnay demand is weak are still 0.05 and 0,50. Choose the correct alternative. > e. Other members of the management team expect the Chardonnay market to become saturated at some point in the future, causing a fall in prices. Suppose that the annual profit projections fall to $60,000 when demand for Chardonnay is strong and Chardonnay grapes only are planted. Using the original probability assessments, determine how this change would affect the optimal decision. Choose the correct alternative. c. Use the expected value approach to recommend which alternative Senec maximize expected annual profit. d. Plant Chardonnay ht is concerned about the probability assessments w ely for Riesling demand to also be strong in this case Plant both grapes weak demand for Riesling is 0.10 and that the proba Plant Riesling Liesling is 0.35. How does this change the recommend mand is weak are still 0.05 and 0.50. Choose the co e. Other members of the management team expect the Chardonnay market future, causing a fall in prices. Suppose that the annual profit projections Chardonnay is strong and Chardonnay grapes only are planted. Using the how this change would affect the optimal decision. Choose the correct alt 22