Exotic Adventures
Exotic Adventures Inc. The Amazon River Voyage
Executive Summary
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 had already booked their trips and now EAI has to decide based on bias information to either cancel the trip or continue with it.
In order to reach to the most cost effective alternative, a decision tree was performed using the information gathered from all sources including costs and probabilities. Along with it, a sensitivity analysis was completed which helped me determine the effect a change in costs would have on the final decision.
With these two decision tools, I was able to conclude that if the trip gets cancelled the company will have a guaranteed loss of $ 184,000 while if they continue with the trip the estimated loss will be less at $172,400, and they will still have a high probability of making it all the way to its destination with out incurring in any additional costs. Based on this analysis I can recommend to EAI that the best alternative is to continue with the trip as planned.
Background
Exotic Adventures Inc. operates expedition style voyages mainly to the Polar Regions during the summer and austral summer. To offset costs they also offered expedition trips to the Amazon River from Belem, Brazil to Iquitos, Peru during the high water season in March. Some experts have suggested that the voyages
Executive Summary
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 had already booked their trips and now EAI has to decide based on bias information to either cancel the trip or continue with it.
In order to reach to the most cost effective alternative, a decision tree was performed using the information gathered from all sources including costs and probabilities. Along with it, a sensitivity analysis was completed which helped me determine the effect a change in costs would have on the final decision.
With these two decision tools, I was able to conclude that if the trip gets cancelled the company will have a guaranteed loss of $ 184,000 while if they continue with the trip the estimated loss will be less at $172,400, and they will still have a high probability of making it all the way to its destination with out incurring in any additional costs. Based on this analysis I can recommend to EAI that the best alternative is to continue with the trip as planned.
Background
Exotic Adventures Inc. operates expedition style voyages mainly to the Polar Regions during the summer and austral summer. To offset costs they also offered expedition trips to the Amazon River from Belem, Brazil to Iquitos, Peru during the high water season in March. Some experts have suggested that the voyages
References: Shaw, P. (1999). Exotic Adventures Inc.: The Amazon River Voyage. Ivey Management Services. Version: (A) 1999-09-01