Decision-Analytic, Simulation-Based Model for Plantation Management Under Uncertainty in a Competitive Environment

Abstract

This work takes a decision-analytic approach to develop a prescriptive model for three essential plantation management decisions: the size of the cultivated area, the method of cultivation, and the price at which the produce will be sold. These decisions are key to plantation performance and are made difficult by uncertainty and the fact that they are neither made simultaneously nor at the same informational state, aspects that the presented approach explicitly includes. The model is developed by addressing the management of a hypothetical plantation. Decision trees are used to represent the structure of the problem, and simulation is employed to calculate the plantation's expected sales given the market conditions. The simulation relies on a customer preference model that fulfills Keeney's Value-Focused Thinking (VFT) requirements for a proper value representation. The results are presented as recommendations for planted areas and cultivation methods, while the implemented selling price depends on the conditions observed at harvest (market and produce characteristics). According to the results, the presented approach is successful in guiding plantation management decisions and may be useful in increasing plantation competitiveness.