Question
Consider the Freemark Abbey Winery case problem. Construct the decision tree for this case (you may use the tree we constructed in class). A consultant
Consider the Freemark Abbey Winery case problem. Construct the decision tree for this case (you may use the tree we constructed in class). A consultant engaged by Freemark Abbey winery has suggested that the net present value of the enhancement of the winery's reputation resulting from bringing a botrytized Reisling to market would be $20,000 (in addition to the additional revenue from the higher wholesale price). On the other hand, the consultant has suggested that should the rain arrive and the mold not form, even selling the juice from the grapes to another wine maker would be dangerous. The consultant therefore suggests that in this event the juice should be sold to a food processor for use as a natural sweetener. Doing so would not change Freemark Abbey's costs but would yield only about $6000 in revenue. (a) Calculate the expected monetary value of the decision tree. (b) What is the expected value of perfect information about the storm?
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