Exotic Adventure Inc.

Executive Summary

Exotic adventures operate Amazon River voyages. The company operates successfully during high water season in March from Belem, Brazil on the Atlantic coast to Iquitos, Peru. After research Exotic adventures expanded their voyages to include low water season in October.

During September Exotic adventures had to make a decision whether to cancel a voyage or to continue the voyage based on ambiguous information regarding safety issues in unusual low water levels.

Method of analysis was conducted by a decision tree technique. Exotic Adventures had three options to make the decision on whether to continue or not continue on the voyage. Option one was to cancel at October 8, and incur total loss of $185,000. Option two was to Cancel at Manaus and incur total loss of $282,000. The third and last option was to turn back before Iquitos If they make it to Manaus the company will not incur any additional costs. However if they are unsuccessful the company will incur losses of $290,000.

The recommendation is for Exotic Adventures to continue from Manaus, with an estimate 50% probability of making it all the way up the river to Iquitos.

Background

Exotic adventures Amazon voyage operated successfully during high water season in March from Belem, Brazil on the Atlantic coast to Iquitos, Peru. EAI started to operate voyages during the low water season after suggestion from prominent naturalists. EAI after research found that the 14-foot draft vessel to be used on new voyages was within the safety margins to operate safely and comfortably. In early August of 1998, 99 passengers had booked passage on the upriver and the downstream voyage at an average price of $4000.00 for October of that year.

By Early September EAI Brazilian agents informed them that the water level was too low between Manaus and Lquitos not safe to navigate. In contrast agents in Peru were advising them that it was okay, and that their Peruvian pilots were...