Chapter 5

Gian Carlo Z.
Belen
Case 5-3 Farm Management

The Ploughman Family owns and operates 640 acres that have been in the family for
several generations. The farm supports two types of livestock: dairy cows and laying
hens as well as three crops: soybeans, corn and wheat. Now, the family has the
objective of what decision is to be made about the mix of livestock and crops should
they make for the upcoming year that would generate the best income for them. Their
objective is to maximize the family’s monetary worth at the end of the coming year.
A. Identify verbally the components of a linear programming model for this problem.
The decision to be made is how many cows and chickens the farm will have in
the incoming year and how much acre of land should be planted in each crop.
While the constraints are the amount of available: number of acre, space for
chicken houses, labor hour, the investment fund available and the minimum
requirements for feeds to be planted. And for the overall measure of performance
it is the monetary worth that should be maximized.
B. Formulate this model. (Either an algebraic or a spreadsheet formulation is

acceptable.)
Planting Planting
soybeans corn wheat total
1 0.9 0.6 537
1.4 1.2 0.7 736
Net val 98 84 56 5220
Acre Planted 450 30 100 580

>= >=
30 100
1 0.5
Acre/cow Acre/hen
Livestocks Livestock
Cow Hen Total
Hr Required per
month 10 0.05 400
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Grazing land
required 2 0 60
Net annual cash
income 1190 5.95 47600
Beginning Value 49000 7000

Decrease in Value
per Year 10% 25%
End Value 44100 5250 49350
Investment
Fund
Cost of new
livestock 2100 4.2 25200 <= 28000
End Value of new
livestock 1890 3.15 0
Current Livestock 30 2000

New Livestock 12 0
Total livestocks 30 2000
<= <=
Barn/house limits 42 5000
Neighboring
Farm work Neighbors
W&S W&F total
Wage 7 7.7 17943.8
Hour Worked 1063 1364 2427
Total Planting Livestocks Neighbors total Available
W&S hours 537 2400 1063 4000 <= 4000
W&F hours 736 2400 1364 4500 <= 4500
Acreage 580 60 0 640 <= 640
Net Income 52220 47600 17943.8 117763.8
End of Yr Value 49350 49350
Leftover investment
Fund 2800 2800
Living Expenses -56000

Total Monetary 113913.
Work 8
C. Obtain an optimal solution and generate the additional output provided for
performing postoptimality analysis (e.g., the Sensitivity Report when using
Excel). What does the model predict regarding the family’s monetary worth at the
end of the coming year?
This model forecast that the family monetary worth at the end of the coming year
will be $ 139113.8
D. Find the allowable range to stay optimal for the net value per acre planted for
each of the three crops.
1.the allowable range for the value per acre planted of soybeans is 61.6 to ∞
2.the allowable range for the value per acre planted of corn is -∞ to 68.4
3.the allowable range for the value per acre planted of wheat is -∞ to 57.15
E. Find an optimal solution under each scenario after making the necessary
adjustments to the linear programming model formulated in part (b). In each
case, what is the prediction regarding the family’s monetary worth at the end of
the year?
In a Drought, the model forecast that the family monetary worth at the end of the coming year
will be $ 70230
In a flood, the model forecast that the family monetary worth at the end of the coming year will
be $ 86598
In an early Frost, model forecast that the family monetary worth at the end of the coming year
will be $124274
In drought and early Frost, model forecast that the family monetary worth at the end of the
coming year will be $ 70628
In a flood and early Frost, model forecast that the family monetary worth at the end of the
coming year will be $ 74486.2097
F. For the optimal solution obtained under each of the six scenarios [including the
good weather scenario considered in parts (a) to (d)], calculate what the family’s
monetary worth would be at the end of the year if each of the other five scenarios
occur instead. In your judgment, which solution provides the best balance
between yielding a large monetary worth under good weather conditions and
avoiding an overly small monetary worth under adverse weather conditions.
Answers will vary. we cannot consider any best from all of the solutions because
each of it has flaws. the riskiest solution would be the Good weather because it
has the highest upside and downside. While the flood solution appears to be a
good middle ground, and from my observation, the other solutions apart from
these two are the most conservative.
G. Modify the linear programming model formulated in part (b) to fit this new
approach.
Planting planting
soybean
s corn wheat total
1 0.9 0.6 511.8
1.4 1.2 0.7 700
Net Val. 47.6 38.5 29.05 24228.4
Acre Planted 414 42 100 556

>=
42 100
1 0.05
acre/cow acre/hen
Livestocks Livestock
Cow Hen total
Hr Required
per month 10 0.05 520
Grazing land
required 2 0 84
Net annual
Cash Income 1190 5.95 47600
Beginning
Value 49000 7000
Decrease in
Value per Year 10% 25%
End Value 44100 5250 49350
Investment
Fund
Cost of new
livestock 2100 4.2 25200 <= 28000
End Value of new
livestock 1890 3.15 0
Current Livestock 30 2000
New Livestock 12 0
Total livestocks 42 2000
<= <=
Barn/house
limits 42 5000
Neighboring
Farm work Neighbors
W&S W&F total
Wage 7 7.7 17943.8
Hour Worked 368.2 680 2427
Total Planting Livestocks Neighbors total available

W&S hours 511.8 3120 368.2 4000 <= 4000
W&F hours 700 3120 680 4500 <= 4500
Acreage 556 84 0 640 <= 640
Net Income 24228.4 47600 17943.8 89772.2

4
end of Yr Value 49350 49350
Leftover
investment Fund 2800 2800
Living Expenses -56000
Total
Monetary
Work 85922.2
H. Repeat part (c) for this modified model.
This model forecast that the family monetary worth at the end of the coming year
will be $ 85922.2
I. Use a shadow price obtained in part (h) to analyze whether it would be

worthwhile for the family to obtain a bank loan with a 10 percent interest rate to
purchase more livestock now beyond what can be obtained with the $20,000
from the investment fund.
The shadow price obtained in part H is 0 which shows that the additional
investment fund will not increase their monetary income. This only shows that
loaning in the bank is not worth it. The Shadow price would be at least $1.10
before a loan at 10% would be worthwhile
J. For each of the three crops, use the postoptimality analysis information obtained
in part (h) to identify how much latitude for error is available in estimating the net
value per acre planted for that crop without changing the optimal solution. Which
two net values need to be estimated most carefully? If both estimates are
incorrect simultaneously, how close do the estimates need to be to guarantee
that the optimal solution will not change?
The net value of soybeans can increase up to $7.5 or decrease up to $4. Then
for the corn its net value can increase up to $4.90 and decrease up to $22.50
while for the wheat net value it can increase up to $.40 decrease any amount
without changing the optimal solution. The expected net value for soybeans and
wheat could be estimated carefully
Total Wheat
monetary expected
worth net value
$85922.2 $18.79 $19.75 $20.75 $21.75 $22.75
$32 86148 86258 86417 86605 86846
Soybeans $33 86562 86672 87086 86749 87260
Expected
Net Value $34 86976 87086 87500 86893 87674
$35 87390 87500 87914 87037 88088
$36 87804 87914 88328 87181 88502
K. Think about specific situations outside of farm management that fit this
description. Describe one.
In my own opinion, the best situation aside from farm management that is
frequently faced by different kinds of situations that bring uncertainty to their
businesses is fast fashion clothing. Some examples are UNIQLO, Zara, H&M
and Forever 21. Similar to the farming industry, the fashion industry also needs to
address different problems and scenarios like scarcity of materials, seasons, and
trends. Any kind of business that has the same challenge with farm management
needs to address these various scenarios so that the business can cope up and
still be profitable.
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Gian Carlo Z.

Case 5-3 Farm Management

B. Formulate this model. (Either an algebraic or a spreadsheet formulation is

Acre Planted 450 30 100 580

Beginning Value 49000 7000

Current Livestock 30 2000

Barn/house limits 42 5000

W&S W&F total

Wage 7 7.7 17943.8

Hour Worked 1063 1364 2427

Total Planting Livestocks Neighbors total Available

W&S hours 537 2400 1063 4000 <= 4000

W&F hours 736 2400 1364 4500 <= 4500

Acreage 580 60 0 640 <= 640

Net Income 52220 47600 17943.8 117763.8

End of Yr Value 49350 49350

Living Expenses -56000

Acre Planted 414 42 100 556

Hour Worked 368.2 680 2427

Total Planting Livestocks Neighbors total available

Net Income 24228.4 47600 17943.8 89772.2

H. Repeat part (c) for this modified model.

I. Use a shadow price obtained in part (h) to analyze whether it would be

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