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Effects of Supply Variations on Costs and Profits of Slaughter Plants

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  • Lawrence A. Daellenbach
  • Lehman B. Fletcher

Abstract

Preferences of the firm for stable or varying flows of raw products are considered. A decision model involving rate and hours of plant operation is developed to measure the, impact of supply variations on plant costs and profits. Situations in which the firm can and cannot predict raw material receipts with certainty are simulated. Varying supplies were found to raise costs of slaughter, but plants with stable supplies lose profits as long as product and input prices vary. Therefore individual firms, especially those that can forecast with a high degree of success, are unlikely to prefer stable to varying supplies.

Suggested Citation

  • Lawrence A. Daellenbach & Lehman B. Fletcher, 1971. "Effects of Supply Variations on Costs and Profits of Slaughter Plants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(4), pages 600-607.
    • Handle: RePEc:oup:ajagec:v:53:y:1971:i:4:p:600-607.
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    File URL: http://hdl.handle.net/10.2307/1237823
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    Cited by:

    1. Kauffman, Daniel, 1984. "An Evaluation of the Potential for a Market in Hog Contracts," Agricultural Economic Report Series 201342, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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