Exotic Adventures, Inc

Executive Summary

Exotic Adventures, Inc (EAI) is a company that offers expedition style voyages primarily to the Polar Regions. During seasons EAI, operates voyages through the Amazon River.

The company was faced with a dilemma when bias information was presented to them regarding the water levels on the Amazon during low water season. The Brazilians stated that the water levels were too small to travel through the Amazon which will make the vessels hard to maneuver. However, the Peruvians stated that the water levels are just fine and EAI should proceed with the voyage. EAI must make a decision by October 8th which is 5 days before the voyage. They had 52 passengers confirmed for the first part of the tour and 47 for the second part of the tour.

In order for EAI to make the optimal decision for their company, I used the Palisades software to create a decision tree with their different options. I also reviewed the additional costs that would be incurred with each decision as well as the saving costs. Graphs and charts were also used to help determine the optimal decision for Exotic.

My recommendation is that Exotic Adventures should proceed with the voyage as planned. The decision tree showed that by cancelling the trip, EAI will incur a loss of $185,000; however proceeding with the trip, the loss will be $172,000. In addition, there is a higher probability (50%) of completing the trip. Exotic Adventures should continue to monitor the water levels for the safety of their passengers. As long as it is safe, the optimal decision is to proceed as planned.

Background Information

The Amazon ranks as the earth's most ecologically diverse rainforest, sprawling across the heart of South America. (Thyberg) Exotic Adventures Inc. (EAI) began its voyages in March 1997 with one upriver and downstream through the Amazon River from Belem, Brazil on the Atlantic Coast to Iquitos, Peru. The voyages were a success; however the company received information...