Gerald W. Dean

Use of Simulation in Evaluating Management Policies under Uncertainty: Application to a Large Scale Ranch

Price and weather environment and decision-making processes are simulated for a large California range-feedlot operation; then DYNAMO programming is used to write the equations and to obtain the equivalent of 400 years of data by simulations on an electronic computer. Formulation of expectations of prices are the main managerial policies tested in the article, but the technique has broader applications to policies and decision making under uncertainty. A comparison among simulated net incomes is made over the period 1954–1963. It is concluded that relatively naive price forecasting methods are sufficiently accurate for the feeder buying decision considered here.

An Application of Statistical Decision Theory to Commercial Turkey Production

This article provides an empirical application of Bayesian decision theory to management decisions under uncertainty. The empirical problem is one of choice between contract and independent production of turkeys. The major random variables affecting incomes are product prices and mortality rates. The optimal action is first determined where only prior probabilities of the states of nature are available. Optimal strategies are then determined where a price-forecasting model is available and posterior probabilities of the states are determined. The value of the additional information provided by the price-forecasting model is substantial. Simulated growth in firm net worth is faster and more stable when the price-forecasting model is used.

A Model of Economic Development for Peasant Farms in Southern Italy

This study uses dynamic linear programming to derive normative development plans through time for small land reform farms in the newly irrigated Metaponto plain of southern Italy. The analysis indicates great potential for internal savings and investment by peasant families and therefore rapid development possibilities for intensive fruit and vegetable cultivation. However, a risk discount of only 16 percent would eliminate orchards from the plans. Government investment in low interest loans and grants for development costs have a high potential return (about 85 percent) on these farms. To facilitate rapid development rates, technological advice to farmers provided by government appears critical. Methodologically, the model maximizes the present value of future returns from annual plans over a 60-year horizon, allowing capital formation and optimum choice between short- and long-term activities. The model could be easily reformulated to solve problems involving optimum timing of replacement of capital assets.

Potential use of the Mansholt Plan for restructuring agriculture in the Italian Mezzogiorno

Abstract The purpose of this article is to report results of research on the potential effectiveness of the Mansholt Plan as a form of government intervention in the interior hill and mountain region of Southern Italy. Alternative strategies of intervention are evaluated in a multiple-goal framework including increases in national and regional income, decrease in outmigration and impacts on income distribution. An aggregate linear programming model is used to estimate potential development for the area. A framework for decisions cast in a multiple-goal objective function and under uncertainty is finally suggested.

Trade and Welfare Effects of EEC Tariff Policy: A Case Study of Oranges

The price, trade, and welfare consequences of shifts to alternative EEC policies regarding winter oranges are presented. The EEC policy changes considered are (1) a shift from continuance of pre-EEC tariffs on oranges to prospective EEC tariffs, (2) elimination of the EEC tariff on oranges, and (3) entry of winter oranges from selected non-EEC countries into the EEC market with zero tariffs. Spatial equilibrium models are used to quantify the changes in prices, consumption, trade, and welfare which are expected to result from the alternative policies. Welfare effects are evaluated in terms of economic surplus. A shift to the prospective EEC tariff policy on winter oranges is expected to result in a sharp increase in orange prices in the EEC by 1970 (except in France). A net welfare gain to the EEC bloc will occur, with the gains for Italian producers and French consumers more than offsetting the losses suffered by consumers in the other EEC countries because of higher prices. If the EEC were to take unilateral action and remove the tariffs on winter oranges, it would be expected to suffer a substantial welfare loss. Permitting tariff-free imports of winter oranges from selected producing countries would also be expected to cause a welfare loss to the EEC bloc. There appears to be little incentive for the EEC to reduce its tariff unilaterally or to permit special access to non-EEC producers.

Rural Poverty and Government Intervention: The Case of the Argentine Yerba Mate Industry

A simple econometric model was used to demonstrate that government intervention in the yerba mate market has favored large producers and processors in the Argentine province of Misiones. Large producers have benefited not only through high price supports but also by integrating vertically to appropriate the price support benefits intended for small farmers. An alternative mixed policy strategy believed to be both economically feasible and politically acceptable was proposed to alleviate rural poverty associated with the yerba mate industry. This policy includes changes in land tenure and farm operational systems along with modifications in current price policy.