ISHS Acta Horticulturae 155: VIII Symposium on Horticultural Economics
SIMULATION OF RANDOM VARIABLES AS A PLANNING INSTRUMENT OF FRUIT AND VEGETABLE FARMS |
| Author: | J. Requena |
| Abstract:
After a general discussion on the nature and types of stochastic simulation techniques, an analysis is made of their possible application to planning activities in firms which, like fruit and vegetable farms, are faced with a universe of highly randomized output prices and cannot make use of strictly deterministic management methods. In this respect, the author demonstrates that applying a methodological scheme based on the complete stochastic simulation of the system to this type of planning is not effective enough, since it is too sophisticated and costly (mainly in terms of computer use), especially when there are more than two random variables (which is a frequent case). On the other hand, the use of a non-random management system represents too wide a gap between the formal system (model) and the actual system (the farm and its market), and therefore does not provide valid conclusions. As a consequence, intermediate methods are needed in order to fill this gap by means of partially applied simulation techniques based on low-cost, short-term data processing. The problem is considered under a partially bayesian approach based on the knowledge of the random nature of the market which allows the farmer to adopt an "a-priori" selection strategy of planning positions together with predetermined risk-benefits levels to allow to find relatively optimum solution(s) which can attain the desired limit levels. This pseudo-bayesian approach, which can be applied in different ways, usually results in a formal decision system which represents a farm, where the inputs are: the random nature of the market, the possible expectations of the farm manager concerning the future accomplishment of the random variables, and the technical and economic characteristics together with the factors that limit the size of the productive activities to be considered. The output is made up by a series of profit or margin distribution functions which correspond to the same number of solutions in the system. Subsequently the most adequate one(s) is (are) selected by introducing the farmer's aspiration regarding risks and benefits into the model. In order to analyze the advantages and disadvantages of such a management scheme and to determine its validity, it is checked against data from a farm growing vegetables in | |
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