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Controlling the Risk for an Agricultural Harvest

Author

Listed:
  • Stuart J. Allen

    () (Penn State University)

  • Edmund W. Schuster

    () (MIT Auto-ID Labs, 23 Valencia Drive, Nashua, New Hampshire 03062)

Abstract

Gathering the harvest represents a complex managerial problem for agricultural cooperatives involved in harvesting and processing operations: balancing the risk of overinvestment with the risk of underproduction. The rate to harvest crops and the corresponding capital investment are critical strategic decisions in situations where poor weather conditions present a risk of crop loss. In this article, we discuss a case study of the Concord grape harvest and develop a mathematical model to control harvest risk. The model involves differentiation of a joint probability distribution that represents risks associated with the length of the harvest season and the size of the crop. This approach is becoming popular as a means of dealing with complex problems involving operational and supply chain risk. Significant cost avoidance, in the millions of dollars, results from practical implementation of the Harvest Model. Using real data, we found that the Harvest Model provides lower-cost solutions in situations involving moderate variability in both the length of season and the crop size as compared to solutions based on imposed risk policies determined by management.

Suggested Citation

  • Stuart J. Allen & Edmund W. Schuster, 2004. "Controlling the Risk for an Agricultural Harvest," Manufacturing & Service Operations Management, INFORMS, vol. 6(3), pages 225-236, July.
  • Handle: RePEc:inm:ormsom:v:6:y:2004:i:3:p:225-236
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    File URL: http://dx.doi.org/10.1287/msom.1040.0035
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    References listed on IDEAS

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    1. George R. Murray, Jr. & Edward A. Silver, 1966. "A Bayesian Analysis of the Style Goods Inventory Problem," Management Science, INFORMS, vol. 12(11), pages 785-797, July.
    2. Jean D. Kinsey, 2001. "The New Food Economy: Consumers, Farms, Pharms, and Science," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1113-1130.
    3. Jing-Sheng Song & Candace A. Yano & Panupol Lerssrisuriya, 2000. "Contract Assembly: Dealing with Combined Supply Lead Time and Demand Quantity Uncertainty," Manufacturing & Service Operations Management, INFORMS, vol. 2(3), pages 287-296, July.
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    Citations

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    Cited by:

    1. Ahumada, Omar & Rene Villalobos, J. & Nicholas Mason, A., 2012. "Tactical planning of the production and distribution of fresh agricultural products under uncertainty," Agricultural Systems, Elsevier, vol. 112(C), pages 17-26.
    2. Rosa, Franco, 2012. "Planning the Sustainable Agro-fuel Supply Chain," Congress Papers 124130, Italian Association of Agricultural and Applied Economics (AIEAA).
    3. Wishon, C. & Villalobos, J.R. & Mason, N. & Flores, H. & Lujan, G., 2015. "Use of MIP for planning temporary immigrant farm labor force," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 25-33.
    4. Kusumastuti, Ratih Dyah & Donk, Dirk Pieter van & Teunter, Ruud, 2016. "Crop-related harvesting and processing planning: a review," International Journal of Production Economics, Elsevier, vol. 174(C), pages 76-92.
    5. Ahumada, Omar & Villalobos, J. Rene, 2011. "Operational model for planning the harvest and distribution of perishable agricultural products," International Journal of Production Economics, Elsevier, vol. 133(2), pages 677-687, October.
    6. An, Kun & Ouyang, Yanfeng, 2016. "Robust grain supply chain design considering post-harvest loss and harvest timing equilibrium," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 88(C), pages 110-128.
    7. Jean-Pierre Aubin & Luxi Chen & Marie-Hélène Durand, 2013. "Dynamic decentralization of harvesting constraints in the management of tychastic evolution of renewable resources," Computational Management Science, Springer, vol. 10(4), pages 281-298, December.
    8. Ahumada, Omar & Villalobos, J. Rene, 2009. "Application of planning models in the agri-food supply chain: A review," European Journal of Operational Research, Elsevier, vol. 196(1), pages 1-20, July.
    9. Bohle, Carlos & Maturana, Sergio & Vera, Jorge, 2010. "A robust optimization approach to wine grape harvesting scheduling," European Journal of Operational Research, Elsevier, vol. 200(1), pages 245-252, January.
    10. Ferrer, Juan-Carlos & Mac Cawley, Alejandro & Maturana, Sergio & Toloza, Sergio & Vera, Jorge, 2008. "An optimization approach for scheduling wine grape harvest operations," International Journal of Production Economics, Elsevier, vol. 112(2), pages 985-999, April.

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    Keywords

    harvest risk; agriculture;

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