The Exotic Adventure Case

EXECUTIVE SUMMARY

Exotic Adventures, Inc. is doing this trip, voyage for the Amazon River from Belem, Brazil to Iquitos, Peru at this time of the year, October, for the first time. This voyage was done by Exotic Adventures Inc. but during the month of March. Even though, Exotic has been advised that the water of the level is too low and the trip should not take place, since the information at hand, the opinion from the pertinent authorities at Peru and Brazil which is not unbiassed, and the result of the Precision Tree software, is all the company has to make the decision, the trip should be cancelled completely. The results from the softare as well as the information available does not justify taking the risk. If the voyage is cancelled at Oct 8, additional losses of $185,000 will be incurred, if taking the risk to continue and turning before Iquitos, additional losses will be $172,400. EMV (the savings of $12,600, do not justify the risk to do the trip and place at risk the reputation of the company and future opportunities in this region.

BACKGROUND

Exotic Adventures Inc. handles expedition type trips globally. IIn this particular case, the expedition (the first one planned by Exotic Adventures, Inc. for the Amazon River during this time of the year) was by vessel from Belem, Brazil to Iquitos, Peru. By August 1998 Exotic Adventures Inc. already had passengers booked for the trip which was taking place in October the same year.

Due to unexpected circumstances related to the level of the water (too low) Exotic Adventures Inc., found itself in a situation where it needed to make an optimal decision among the alternatives available:

* cancel the trip which is supposed to take place on October 8, 1998 and lose $185,000

* allow the first part of the voyage to take place and cancel at Manaus- if water level continue to drop- and incur in additional expenses of $282,000

* continue to Iquitos, Peru and, hoping to be able to finish the trip and...