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Matching Supply and Demand: The Value of a Second Chance in Producing Seed Corn

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  • Philip C. Jones
  • Timothy J. Lowe
  • Rodney D. Traub

Abstract

This paper analyzes the supply chain for hybrid seed corn in which there are two sequential production periods with random yields before demand occurs. We show that the problem of managing the supply chain can be viewed as a multiperiod optimization model that is easily solved. By examining data that represents actual costs, prices, and yields encountered in the seed corn industry, we gain some insight into the value that the second production period provides. Using a representative sample of hybrids from a major seed corn producer, we show that margins could be enhanced considerably by using the model.

Suggested Citation

  • Philip C. Jones & Timothy J. Lowe & Rodney D. Traub, 2002. "Matching Supply and Demand: The Value of a Second Chance in Producing Seed Corn," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 222-238.
    • Handle: RePEc:oup:revage:v:24:y:2002:i:1:p:222-238.
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    File URL: http://hdl.handle.net/10.1111/1467-9353.00093
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    References listed on IDEAS

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    1. Gerchak, Yigal & Grosfeld-Nir, Abraham, 1998. "Multiple lot-sizing, and value of probabilistic information, in production to order of an uncertain size," International Journal of Production Economics, Elsevier, vol. 56(1), pages 191-197, September.
    2. Arthur Hsu & Yehuda Bassok, 1999. "Random Yield and Random Demand in a Production System with Downward Substitution," Operations Research, INFORMS, vol. 47(2), pages 277-290, April.
    3. Gary D. Eppen & Ananth. V. Iyer, 1997. "Backup Agreements in Fashion Buying---The Value of Upstream Flexibility," Management Science, INFORMS, vol. 43(11), pages 1469-1484, November.
    4. Philip C. Jones & Timothy J. Lowe & Rodney D. Traub & Greg Kegler, 2001. "Matching Supply and Demand: The Value of a Second Chance in Producing Hybrid Seed Corn," Manufacturing & Service Operations Management, INFORMS, vol. 3(2), pages 122-137, April.
    5. Lawrence R. Weatherford & Samuel E. Bodily, 1992. "A Taxonomy and Research Overview of Perishable-Asset Revenue Management: Yield Management, Overbooking, and Pricing," Operations Research, INFORMS, vol. 40(5), pages 831-844, October.
    6. Candace Arai Yano & Hau L. Lee, 1995. "Lot Sizing with Random Yields: A Review," Operations Research, INFORMS, vol. 43(2), pages 311-334, April.
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    Cited by:

    1. Magnier, Alexandre & Kalaitzandonakes, Nicholas G. & Miller, Douglas J., 2010. "Product Life Cycles and Innovation in the US Seed Corn Industry," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 13(3), pages 1-20, September.
    2. Harrington, David H. & Jefferson-Moore, Kenrett Y., 2006. "The Distribution of Rents in Supply Chain Industries: The Case of High Oil Corn," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25579, International Association of Agricultural Economists.
    3. Pinçe, Çerağ & Yücesan, Enver & Bhaskara, Prithveesha Govinda, 2021. "Accurate response in agricultural supply chains," Omega, Elsevier, vol. 100(C).

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