Simulation Sequential Production agriculture agribusiness dual period production
Abstract:
This thesis analyzes the problem of dual period sequential seed corn production in the presence of random yields. Seed corn producers in the United States face a production problem when growing seed corn to meet the national demand. If the growing season is poor due to drought, disease, or natural disaster, seed corn supply decreases, and there is not sufficient seed corn available to meet the demand. As a result, large seed corn companies such as Dow AgroSciences, DuPont, and Syngenta have shifted to a two-hemisphere production model. This allows a seed corn producer to compensate for a poor first period production in the United States by planting additional land in the South America during the second production period. The challenge the firm faces is that the second period production is dependent on the first period production, and the first period production is dependent on the second period production. The model used in this paper chose an optimal land area to plant in the first period factoring in a second production period. Monte Carlo simulations were used to solve the firm’s problem. The results indicated that firms can increase their expected profit by up to 7% by producing the seed two times instead of only one time.
