Determine the optimal strategy for the breeder, Microeconomics

Consider a decision faced by a cattle breeder. The breeder must decide how many cattle he should sell in the market each year and how many he should retain for breeding purposes.  Suppose the breeder starts with a herd of 200 cattle. If he breeds cattle, he obtains 1.4 times as many cattle per year as he started with.  The cost of breeding is $30 for each head of cattle not sold.  Breeding takes one year, and the $30 cost includes all expenses of maintaining an animal and its offspring.  Alternatively, the breeder may sell cattle in the market, at a price which depends on how many cattle he sells.  If Y represents the number of cattle which are sold in a given year, then the Price, P, is given by the following equation:

       P = 200 - 0.2Y,        0 ≤Y ≤ 1,000

Start at the end of the actual decision process and represent the size of the herd in year 10 as x10. The herd is to be sold at $150 per head at the beginning of year 10 and consider f10(x10)= 150 x10.

Assume that the breeder plans to sell his entire herd at the beginning of 10 years from now and retire.  Determine the optimal strategy (of breeding and selling in the market place) for the breeder over the next ten years using dynamic programming, so that his profits are maximised at the time of retirement.

Posted Date: 3/9/2013 12:26:48 AM | Location : United States







Related Discussions:- Determine the optimal strategy for the breeder, Assignment Help, Ask Question on Determine the optimal strategy for the breeder, Get Answer, Expert's Help, Determine the optimal strategy for the breeder Discussions

Write discussion on Determine the optimal strategy for the breeder
Your posts are moderated
Related Questions
Changes in Market Equilibrium Equilibrium prices are known by the associate level of supply and demand. Supply and demand are decided by particular values of supply & demand

The Law for Diminishing Marginal Returns - As use of an input increases in equal increments, a point will be approched at which the resulting additions to output decreases



Determinants of Private Demand - Waiting-Time for Employment ‘Waiting time’ for employment is another important factor. The waiting time varies from course to course. For inst


1. Describe why government regulation is required, citing the major reasons for government involvement in a market economy. 2. Justify the rationale for the intervention of gove

When a worker is fired orlaid off, they experience a significant out-of-pocket cost. That cost of job loss relies on how much they were earning in their job, how long it takes them

Globalization: A generalized historical process by which more economic activity occurs across national borders. Forms of globalization include international trade (imports and expo

Q. What do you meant by Hoarding? A situation in that companies, financial investorsor individual consumers choose to hold hoards of cash or other liquid assets, instead of spe