A farmer can grow wheat, corn and beans on his 500 acres of farm land.

He requires 200 tons of

wheat and 240 tons of corn to feed his cattle. For domestic use, he requires 100 tons of beans.

He can either grow these crops or buy them from the market. The planting cost for the crops is
given by $150 /acre (wheat), $230 /acre (corn) and $260 /acre (beans). The crops can be sold in the
market at $170 /ton (wheat), $150 /ton (corn) and $200/ton (beans). Any shortfall can be
purchased from the market at $238 /ton (wheat) and $210 /ton (corn) and $270 /ton (beans).

The yields (in tons /acre) of the crops depend on the weather. The farmer believes that the
weather can be good, fair, bad or very bad with equal probability. If the yield of a crop is 'y' in fair
weather, then the variation of the yield with weather is given by:

Good 1.2y
Fair y
Bad 0.8y
Very bad 0.6y

The yields (in tons/acre) of the various crops under the various weather scenarios are:
Wheat Corn Beans
Good 3 3.6 24
Fair 2.5 3 20
Bad 2 2.4 16
Very bad 1.5 1.8 12

How much land should the farmer allocate to each crop so as to maximize expected profit?
Farm Planting Decisions in Face of Crop Yield Uncertainty

Deterministic Model
Step 1

Data Note, yield and price data are completely artificial/arbitrary.

Selling Cost/Unit,
Quantity Planting Price/Unit Shortfall/Bou
Crops Required Cost/Acre for Excess ght
Wheat 200 150 170 238
Corn 240 230 150 210
Beans 100 260 200 270

Total Area 500

Adjustables
Area
Allocated Quantity Quantity Quantity
Crops Harvested Sold Purchased
Wheat 0 0 0 0
Corn 0 0 0 0
Beans 0 0 0 0

Objective Maximize Profit = Amount Obtained from Selling - Planting Cost - Purchase Cost
0
Planting Cost 0
Purchase Cost 0
Amount from Selling 0

Constraints Total area allocated to all the crops should be less than the 'Total Area'
0 <= 500

Wheat 0 Not = 200

Corn 0 Not = 240
Beans 0 Not = 100
Quantity Harvested + Bought Quantity Sold + Required
 Adding Stochastic Features
Yield Scenarios

Wheat Corn Beans

Yield/Acre
(random) Good 3 3.6 24
3 Fair 2.5 3 20
3.6 Bad 2 2.4 16
24 Very Bad 1.5 1.8 12

Step 2
Declare the area allocated to each crop as stage 0 variables
WBSP_VAR

Declare the yield of each crop as stage 1 random parameters

WBSP_RAND

Declare the sold and purchased variables as stage 1

Shortfall/Purchased WBSP_VAR
Excess/Sold WBSP_VAR

Step 3
Declare a discrete distribution for the random parameters
All Crops WBSP_DIST_DISCRETE_SV

Step 4
Enter the scenario information, for sampling
WBSP_STSC Stage Scenarios
1 4
Step 5
Enter the cells that you wish to report, histogram

Objective Value WBSP_REP WBSP_HIST

Yield WBSP_REP
Area Allocated WBSP_REP
Scenario Tree

1.5 Wheat 1a 1.8 Corn 1a

2 Wheat 1b 2.4 Corn 1b

Crops Decision
2.5 Wheat 1c 3 Corn 1c

3 Wheat 1d 3.6 Corn 1d

Stage 0 Stage 1
initial Beginning
decision 4 random
on area outcomes
on yields

computation
 12 Beans 1a Scenario 1

16 Beans 1b Scenario 2

20 Beans 1c Scenario 3

24 Beans 1d Scenario 4

Stage 1
End
recourse
decision
on crops
and final
computation