Jeffrey D. Apland

VALIDATION OF LINEAR PROGRAMMING MODELS

Systematic approaches to validation of linear programming models are discussed for prescriptive and predictive applications to economic problems. Specific references are made to a general linear programming formulation, however, the approaches are applicable to mathematical programming applications in general. Detailed procedures are outlined for validating various aspects of model performance given complete or partial sets of observed, real world values of variables. Alternative evaluation criteria are presented along with procedures for correcting validation problems.

The Farm Lease: An Analysis of Owner-Tenant and Landlord Preferences under Risk

A variety of farm lease terms are examined with respect to the preferences of an owner-tenant and landlord under risk. The owner-tenants optimal crop mix is examined for six common leasing arrangements. A variant of the MOTAD model is used to derive the optimal crop mix for a risk-neutral and risk-averse owner-tenant. For two share leases, the trade-offs between the owner-tenants and landlords preferences are examined with each agent given neutral and averse risk postures. Results suggest the importance of mixed tenancy and risk in the selection of lease terms for farm land.

Risk and the Demand for Supplemental Irrigation: A Case Study in the Corn Belt

Rapid increases in irrigated acreage in the Corn Belt states during recent years have renewed interest in the associated questions of water resource management and the economic feasibility of supplemental irrigation. Corn plant growth and the associated grain yield is particularly sensitive to moisture stress during pollination (June or July), when soil moisture is especially variable. By reducing moisture stress in these periods, supplemental irrigation can increase and stabilize corn yields. The focus of most economic feasibility studies of irrigation has been to compare the increases in crop revenues to the costs of irrigating-a cost-benefit approach. It has been suggested, however, that stability of yields, and thus the reduction of risk, should be considered among the benefits from irrigation (Carson, Wheaton, Mannering). Although cost-benefit studies have been used to explain the rapid adoption of irrigation in humid areas by exploring the impacts of prices, costs, and technology changes; no thorough analysis has been made of the impact of risk aversion on the demand by farm firms for supplemental irrigation. This study evaluates the implications of risk aversion for the derived demand for supplemental irrigation of corn using a case study approach.

The dynamics of beef cattle production: model formulation, application and an example

The beef cattle feeding problem is cast in the context of a multistage production process using mathematical programming. By defining discrete stages of growth, the model is able to account for changes in nutrient requirements through time. Time-related costs such as interest and labor may be incorporated in the formulation. Estimated equations from the 1984 Nutrient Requirements for Beef Cattle published by the National Research Council are used. The mathematical program is nonlinear in the objective due to interest cost calculations and in the constraints due to the functional forms of nutrient requirement equations. Formulation of the nonlinear programming problem using linear programming and the approximating technique of grid linearization is demonstrated. Results of an empirical application of the model are presented. In that example, the effects of interest rates on optimal feeding strategies for beef cattle are analyzed.

Crop residue supply for energy generation: A prototype application to midwestern U.S.A. grain farms

Abstract This analysis focuses on the dynamics of the production process, sequential decision making, and weather uncertainty as they affect the crop residue supply response of midwestern United States grain farms. Supply estimates for a typical grain farm are reported under varying harvest season weather conditions. A supply response analysis for a hypothetical region suggests that crop residue production would be quite price responsive and variable. The development of new harvest techniques and storage are identified as important to the economic viability of crop residues as energy resources.