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Simulation: A Tool for Farm Planning under Conditions of Weather Uncertainty

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  • Pinhas Zusman
  • Amotz Amiad

Abstract

This paper attempts to determine the optimal organization and managerial policies of a farm operating under conditions of low and unstable rainfall. This objective was accomplished by computer simulation of the decision process. The performance characteristics of various decision rules were evaluated by simulating the farm over a set of sampled sequences of years with weather events constituting the main stochastic input. Optimal decision rules were defined in terms of the present value and the coefficient of variations of the income flows. The optimal decision rules were approximated by experimental variation of their parameters. A partial factorial design was first developed in order to determine the main features of the response surface. The optimum solution was then approached by the steepest ascent procedure. It is suggested that simulation may be useful in solving more general managerial problems arising under uncertainty.

Suggested Citation

  • Pinhas Zusman & Amotz Amiad, 1965. "Simulation: A Tool for Farm Planning under Conditions of Weather Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(3), pages 574-594.
    • Handle: RePEc:oup:ajagec:v:47:y:1965:i:3:p:574-594.
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    File URL: http://hdl.handle.net/10.2307/1236274
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    Citations

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    Cited by:

    1. MacAulay, T. G., 1972. "Simulation as an Aid to Decision Making," Working Papers 244697, University of Guelph, Department of Food, Agricultural and Resource Economics.
    2. Mapp, Harry P. Jr. & Eidman, Vernon R., 1970. "Sequential Sampling and Simulation: An Optimizing Procedure," WAEA/ WFEA Conference Archive (1929-1995) 323631, Western Agricultural Economics Association.
    3. Mullen, John D., 2001. "An Economic Persective On Land Degradation Issues," Research Reports 27999, New South Wales Department of Primary Industries Research Economists.
    4. Jackson, Ron, 1975. "Decision Analysis And Farm Management: The Need For A New Perspective," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 43(03), pages 1-5, September.
    5. Sporleder, Thomas L., 1972. "Temperature Probabilities and the Bayesian No Data' Problem," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 4(1), pages 113-117, July.
    6. Jensen, Harald R., 1977. "PART I. Farm Management and Production Economics, 1946-70," AAEA Monographs, Agricultural and Applied Economics Association, number 337213, january.
    7. Rae, Allan N., 1970. "Capital Budgeting, Intertemporal Programming Models, With Particular Reference To Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 14(1), pages 1-14, June.
    8. Luigi Solari, 1966. "La simulation dans la prévision et la programmation en econometrie," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 102(III/IV), pages 391-408, September.
    9. Groenewald, J. A. & van Zyl, J., 1986. "Effect Of Variable Water Supply And Quality On Desirable Crop Production Patterns," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 25(3), October.
    10. Johnson, S.R. & Rausser, Gordon C., 1977. "PART III. Systems Analysis and Simulation in Agricultural and Resource Economics," AAEA Monographs, Agricultural and Applied Economics Association, number 337223, january.
    11. Harrison, Stephen R. & Longworth, John W., 1977. "Optimal Growth Strategies For Pastoral Firms In The Queensland Brigalow Scheme," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(2), pages 1-7, August.
    12. Wright, A. & Dent, J. Barry, 1969. "The Application Of Simulation Techniques To The Study Of Grazing Systems," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 13(2), pages 1-10, December.

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