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An Application Of Safety-First Probability Limits In A Discrete Stochastic Farm Management Programming Model

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  • Hatch, L. Upton
  • Atwood, Joseph A.
  • Segar, James
Abstract
A sequential decision-making model was developed, and data from farm-raised catfish production were used to demonstrate its use. Outcomes of sequences of decisions which satisfied chance constraints on ending cash balances were traced through a specified time period. Discrete choice variables were specified due to the fixed nature of pond facilities. Recourse actions specified were sale of production in excess of endogenously determined transfer levels or purchase of inputs to supplement needs of the next production stage. Production activities cannot be changed during the planning period. Only yield variability was considered due to its impact on relative competitiveness among growth stages. Deviations were calculated from endogenously determined target levels based on goal and probability limits.

Suggested Citation

  • Hatch, L. Upton & Atwood, Joseph A. & Segar, James, 1989. "An Application Of Safety-First Probability Limits In A Discrete Stochastic Farm Management Programming Model," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 21(1), pages 1-8, July.
    • Handle: RePEc:ags:sojoae:30168
    DOI: 10.22004/ag.econ.30168
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    References listed on IDEAS

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    1. P. B. R. Hazell, 1971. "A Linear Alternative to Quadratic and Semivariance Programming for Farm Planning under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(1), pages 53-62.
    2. Allan N. Rae, 1971. "An Empirical Application and Evaluation of Discrete Stochastic Programming in Farm Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(4), pages 625-638.
    3. P. B. R. Hazell, 1971. "A Linear Alternative to Quadratic and Semivariance Programming for Farm Planning under Uncertainty: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(4), pages 664-665.
    4. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652, November.
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    6. Anderson, Jock R. & Feder, Gershon, 2007. "Agricultural Extension," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 44, pages 2343-2378, Elsevier.
    7. Mapp, Harry P. & Hardin, Michael L. & Walker, Odell L. & Persaud, Tillak, 1979. "Analysis Of Risk Management Strategies For Agricultural Producers," 1979 Annual Meeting, July 29-August 1, Pullman, Washington 278205, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Mao, James C T, 1970. "Survey of Capital Budgeting: Theory and Practice," Journal of Finance, American Finance Association, vol. 25(2), pages 349-360, May.
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    10. Joseph A. Atwood & Myles J. Watts & Glenn A. Helmers, 1988. "Chance-Constrained Financing as a Response to Financial Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 79-89.
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    Cited by:

    1. Blank, Steven C., 2001. "The Challenge To Think Big As American Agriculture Shrinks," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(2), pages 1-17, December.
    2. Blank, Steven C., 2001. "Globalization, Cropping Choices, and Profitability in American Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 33(2), pages 315-326, August.

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    Keywords

    Farm Management;

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