Exotic Adventures Inc. is a company dedicated to provide customers with expedition style voyages. Their primary products are trips to the Polar Regions but because these are done just in the summer time, they also offer trips to the Amazon River during other times of the year. Voyages go from Brazil to Peru and are done during high water season. Suggestions from naturalists plus extensive research made them include trips to the Amazon during the low water season. Problems arouse when the company got informed by their Brazilian agents that the water level was too low to navigate while their Peruvian agents were stating everything was ok. At this point 52 passengers …show more content…
A decision tree and a sensitivity analysis were done in order to be able to determine the best cost effective alternative for Exotic Adventures.
The first decision Exotic Adventures has to make is either to cancel the trip or continue it as planned. If they cancel the trip before Oct 8th they will incur in losses adding up to $184,000. If on the other hand they decide to continue with the trip, they will face three different scenarios:
1. Cut the trip short at Manaus: If level of the water keeps dropping, which has a 20% chance of happening, EAI will have to cancel the trip at that point and incur in additional expenses for a total of $282,000.
2. Turn back before Iquitos: There is an 80% probability that the water levels are high enough and the vessel can continue to its destination, but on the way to Iquitos there is a 50% chance that the water’s level is too low and the voyage will have to turn back before getting to Iquitos costing the company $290,000 in additional costs. The combination of these two probabilities gives us a 40% chance of having to turn back before Iquitos.
3. Getting to Iquitos: If the Company can continue with the