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Plant Location Analysis Using Discrete Stochastic Programming

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  • Brown, Colin G.
  • Drynan, Ross G.

Abstract

A plant location model with two major aspects is outlined. First, discrete stochastic programming is used to handle variability in supplies and demands. Second, the cost structure of plants is modelled in more detail and with more realism than is usual. Results from applying the model to the Queensland cattle slaughtering industry demonstrate the inappropriateness of using traditional deterministic plant location models to analyse problems with major stochastic elements. Deterministic models yield plant locations, sizes, throughputs, commodity flows and implications which differ markedly from those generated by stochastic models in which plant sizes and locations are optimally matched to variable fat cattle supplies. In addition, the traditional deterministic long-run model overestimates the normative gains of industry rationalisation.

Suggested Citation

  • Brown, Colin G. & Drynan, Ross G., 1986. "Plant Location Analysis Using Discrete Stochastic Programming," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 30(1), pages 1-22, April.
    • Handle: RePEc:ags:ajaeau:22876
    DOI: 10.22004/ag.econ.22876
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    Cited by:

    1. Adamson, David & Mallawaarachchi, Thilak & Quiggin, John C., 2007. "Water use and salinity in the Murray–Darling Basin: A state-contingent model," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 1-19.
    2. M T Lucas & D Chhajed, 2004. "Applications of location analysis in agriculture: a survey," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(6), pages 561-578, June.
    3. John Quiggin & David Adamson & Sarah Chambers & Peggy Schrobback, 2010. "Climate Change, Uncertainty, and Adaptation: The Case of Irrigated Agriculture in the Murray–Darling Basin in Australia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(4), pages 531-554, December.
    4. Quiggin, John & Adamson, David & Chambers, Sarah & Schrobback, Peggy, 2009. "Climate change, mitigation and adaptation: the case of the Murray-Darling Basin in Australia," Risk and Sustainable Management Group Working Papers 149878, University of Queensland, School of Economics.
    5. repec:bla:canjag:v:58:y:2010:i:s1:p:531-554 is not listed on IDEAS
    6. Schilizzi, S. G. M. & Kingwell, R. S., 1999. "Effects of climatic and price uncertainty on the value of legume crops in a Mediterranean-type environment," Agricultural Systems, Elsevier, vol. 60(1), pages 55-69, May.

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