Determining optimal selling time of cattle: a stochastic dynamic programming application
Fecha
2015
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Universidad EAFIT
Resumen
World’s meat market conditions have forced the beef sector to look for strategies to become competitive and researchers have proved that optimal replacement decisions are one of the most important factors that affect competitiveness -- The present paper formulates a model in a discrete stochastic dynamic programming framework which describes manager’s decision-making process combining both economic and biological variables and involving uncertainty on price fluctuations: investors can use the model to support their decisions of selling or keeping a fattening animal -- The methodology developed is very general and can be used in different regions under similar production conditions by calibrating the parameters and making the required changes according to local regulations -- The paper illustrates model’s conveniences with an empirical application based on a local Colombian market, proving that researchers were right when ranked the dynamic programming as an excellent modeling tool for evaluating livestock replacement