Graduate Thesis Or Dissertation
 

Optimum cattle inventory systems under conditions of certainty and uncertainty--south-eastern Oregon

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  • The economic efficiency related to the use of the range resource is extremely important to an area such as Southeastern Oregon where most of the gross income of the area is obtained from range livestock production; important to the economic progress of the region and to the development of a desirable social structure for the citizenry. The investigation of the decision making problem under conditions of uncertainty implies that the certainty problem can be solved for all uncertain alternatives. The certainty alternatives are admissible only when the economic efficiency criterion is met. The criterion used in this study for decision making under uncertainty involved maximizing expected utility through the use of a multivariate Bayesian statistical model. The uncertain states of nature were next year’s cattle price and forage production. The optimal strategy involved the structure of the cattle inventory. A set of equations was developed which generate the input-output coefficients and the objective function values for a linear program solution for any cattle inventory system with respect to expected calving percentage, death loss, replacement policy, cattle weights and prices, and for any number of time increments. A set of homogeneous livestock inventory systems were defined such that a linear program model can be used to determine the optimal inventory structure under certainty conditions. The link between the resource equation system and the linear program improves the feasibility of effectively getting large volumes of budgeted ranch data into an optimizing framework. Primary data were used to establish costs and returns and the land use structure for representative units. Despite the variance in physical structure that exist among the ranch population ranch units, there are certain consistencies for which some general results can be inferred: 1)Under conditions of certainty with respect to price and forage productions, the optimal livestock inventory structure for the study area would tend toward the production of yearling and other steer beef. The study area ranch units tend toward the production and sale of calve beef. It is postulated that this discrepancy between what "should be" and "what is" is a result of the dependency of the ranch unit on public lands. The public land input is commensurate with an administrative definition rather than the physical production relationship. This difference is defined as a misallocation and the models developed can be used to quantify this misallocation. This condition is independent of the present public grazing fee structure. 2)The primary data indicate that the area could absorb an increase of 20 percent in the total spring, summer, and fall range forage with substantially the present resource structure. Range improvements have an expected marginal value product of $3.00 per animal unit month. 3)It is meaningful through the use of the models developed to think in terms of a general population utility function for purposes of explaining the population's economic behavior with respect to cattle inventory structure and for predicting economic stimuli responses. It is concluded that multivariate regression models in obtaining a posteriori weights for decision making under uncertainty can be formulated as an operational management tool. The combination of subjective and objective evidence into the scientific approach for decision making has wide use implications beyond firm management problems.
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