Operations Management: Other Operations Management Problems – #274


Question: A farmer has a 2,500 acre farm. The farmer has potential cash crops of peanuts, alfalfa, and beef, and the beef are fed 100% alfalfa.

The farmer irrigates his normally parch-dry land from a series of deep drill wells. The wells are sufficient to provide him with 5,500 acre-feet of water per year. An acre-foot or water is sufficient water to cover one acre of land with water one foot deep over a year’s time period.

With this data, the farmer is working on this farm production schedule for the upcoming year.

He estimates that beef will sell for $650 per ton, and a mature beef cow should produce a ton of beef. Peanuts will sell for $3.25 per bushel. His best guess is that he will be able to sell alfalfa for $64 per ton if he has excess alfalfa over what his cattle stocks require, but if he needs more alfalfa to feed his cattle than he can raise, then he will have to pay $66 per ton to get the alfalfa brought in.

Based on his past yields, his fields should yield 50 bushels of peanuts and 3 tons of alfalfa per acre.

His other costs and requirements are as follows:

What should he do to achieve a maximum return?

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