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Optimal Marketing of Nursery Crops from Container‐Based Production Systems
Author(s) -
Stokes Jeffrey R.,
Mjelde James W.,
Hall Charles R.
Publication year - 1997
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243957
Subject(s) - production (economics) , discounting , stochastic programming , dynamic programming , economics , microeconomics , value (mathematics) , business , marketing , computer science , mathematics , mathematical optimization , finance , machine learning
Optimal production and marketing decisions for a nursery producing ornamental plants from a container‐based production system are determined. The stochastic dynamic programming model developed captures the existence of a value‐added, serial‐stage production process with multiple products and intra‐ and interyear dynamics. Results suggest price differentials play an important role in determining the optimal size of plant to market. Further, federal taxes are important for determining the optimal production and marketing decisions while discounting and state taxes play minor roles. Analysis of the transition probability matrices associated with the optimal decisions indicate that the long‐run behavior of the system can be generalized.