(375a) Designing Wine Under Uncertainty

An existing methodology for the development of consumer products, one that builds consumer preference functions and uses pricing models, is applied to winemaking. Consumer needs and preferences are identified, allowing the data generated by market analysis to be related to wine properties. These wine properties are easily engineered throughout the winemaking process and can be manipulated by the manufacturer at little cost. This new consumer function can be incorporated into a demand model that allows for the manipulation of the selling price of a bottle of wine. Based on the consumer and the demand models, maximization of the profit can be performed. Although we understand that wine can be described by many more characteristics, we picked the following: Clarity, Color, Bouquet, Acidity, Sweetness, Bitterness, Body/Texture, Finish/Aftertaste. We then connected these characteristics to specific wine properties and processes, especially to the compounds that are obtained through the different levels of oak barrel toasting. The summation of the products of each attribute and their corresponding weights allow for the development of a preference function. The value of satisfaction of the consumer is then compared to that of the competition, forming the superiority function that governs the demand model. Without uncertainty incorporated into the demand or business model, the optimum production capacity of wine was found. When uncertainty is incorporated into the model, the decision making changes and the risk associated is too large. It was found that manufacturing a wine of lower consumer utility can, in some cases, reduce the risk at similar aspiration levels.