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A multistage stochastic programming model for the New Zealand dairy industry

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  • Guan, Z.
  • Philpott, A.B.

Abstract

This paper presents an application of multistage stochastic programming to a production planning problem for Fonterra, a leading company in the New Zealand dairy industry, taking into account uncertain milk supply, priceâdemand curves and contracting. We describe a model for Fonterra's supply chain, and a model for uncertain milk supply. We then present a multistage stochastic quadratic programming model and a decomposition algorithm to compute an optimal sales policy, which is tested in simulation against a deterministic policy.

Suggested Citation

  • Guan, Z. & Philpott, A.B., 2011. "A multistage stochastic programming model for the New Zealand dairy industry," International Journal of Production Economics, Elsevier, vol. 134(2), pages 289-299, December.
    • Handle: RePEc:eee:proeco:v:134:y:2011:i:2:p:289-299
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    1. Doole, Graeme J. & Romera, Alvaro J., 2015. "Trade-offs between profit, production, and environmental footprint on pasture-based dairy farms in the Waikato region of New Zealand," Agricultural Systems, Elsevier, vol. 141(C), pages 14-23.
    2. P. Girardeau & V. Leclere & A. B. Philpott, 2015. "On the Convergence of Decomposition Methods for Multistage Stochastic Convex Programs," Mathematics of Operations Research, INFORMS, vol. 40(1), pages 130-145, February.
    3. Behzadi, Golnar & O’Sullivan, Michael Justin & Olsen, Tava Lennon & Zhang, Abraham, 2018. "Agribusiness supply chain risk management: A review of quantitative decision models," Omega, Elsevier, vol. 79(C), pages 21-42.
    4. Dowson, Oscar & Philpott, Andy & Mason, Andrew & Downward, Anthony, 2019. "A multi-stage stochastic optimization model of a pastoral dairy farm," European Journal of Operational Research, Elsevier, vol. 274(3), pages 1077-1089.
    5. Stüve, David & van der Meer, Robert & Lütke Entrup, Matthias & Agha, Mouhamad Shaker Ali, 2020. "Supply chain planning in the food industry," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Kersten, Wolfgang & Blecker, Thorsten & Ringle, Christian M. (ed.), Data Science and Innovation in Supply Chain Management: How Data Transforms the Value Chain. Proceedings of the Hamburg International Conference of Lo, volume 29, pages 317-353, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    6. Pereira, Daniel Filipe & Oliveira, José Fernando & Carravilla, Maria Antónia, 2020. "Tactical sales and operations planning: A holistic framework and a literature review of decision-making models," International Journal of Production Economics, Elsevier, vol. 228(C).
    7. Jianli Luo & Chen Ji & Chunxiao Qiu & Fu Jia, 2018. "Agri-Food Supply Chain Management: Bibliometric and Content Analyses," Sustainability, MDPI, vol. 10(5), pages 1-22, May.
    8. Pereira, Daniel Filipe & Oliveira, José Fernando & Carravilla, Maria Antónia, 2023. "Design of a sales plan in a hybrid contractual and non-contractual context in a setting of limited capacity: A robust approach," International Journal of Production Economics, Elsevier, vol. 260(C).
    9. Sheng-I Chen & Wei-Fu Chen, 2021. "The Optimal Harvest Decisions for Natural and Artificial Maturation Mangoes under Uncertain Demand, Yields and Prices," Sustainability, MDPI, vol. 13(17), pages 1-17, August.
    10. Timo Lohmann & Steffen Rebennack, 2017. "Tailored Benders Decomposition for a Long-Term Power Expansion Model with Short-Term Demand Response," Management Science, INFORMS, vol. 63(6), pages 2027-2048, June.
    11. Borodin, Valeria & Bourtembourg, Jean & Hnaien, Faicel & Labadie, Nacima, 2016. "Handling uncertainty in agricultural supply chain management: A state of the art," European Journal of Operational Research, Elsevier, vol. 254(2), pages 348-359.
    12. Behzadi, Golnar & O'Sullivan, Michael Justin & Olsen, Tava Lennon & Scrimgeour, Frank & Zhang, Abraham, 2017. "Robust and resilient strategies for managing supply disruptions in an agribusiness supply chain," International Journal of Production Economics, Elsevier, vol. 191(C), pages 207-220.
    13. Gupta, Narain & Dutta, Goutam & Fourer, Robert, 2014. "A Multi-Period Two Stage Stochastic Programming Based Decision Support System for Strategic Planning in Process Industries: A Case of an Integrated Iron and Steel Company," IIMA Working Papers WP2014-04-04, Indian Institute of Management Ahmedabad, Research and Publication Department.

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