School of Agriculture, Food and Ecosystem Sciences - Theses
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ItemAustralian wheat storage : an application of dynamic programming( 1975)Research on Australian wheat policy has been mainly concerned with supply and stabilisation; little work has been done on inventory policy. This area of study has recently assumed increased importance because of the large wheat carryover held by the Australian Wheat Board during the wheat crisis of the late sixties. This thesis is an investigation and evaluation of the two main motives for holding stocks of wheat in Australia. These are: (i) Withholding wheat from the export market as part of an oligopolistic marketing strategy. (ii) Storing wheat in low price years with the aim of selling it at a higher price at a late date. Chapter 1 discusses oligopolistic pricing in the world wheat market. Two models of price formation in which the U.S.A. and Canada act as co-operative duopolists are discussed, and a third model is developed to explain the triopoly formed by Australia, Canada and the United States. The rest of the chapter is concerned with the expansion of Australian wheat production in the late fifties and sixties, and the problems of handling and storing wheat which arose from increased production and the large stocks held in the 1968/69 and 1969/70 seasons. This chapter provides background for the study. The problem of evaluating storage policy based on price movements alone was formulated as an inventory model. This model was solved by dynamic programming using sets of simulated prices. The computer solutions of the model estimate the return to storage from following optimal policies. The dynamic programming model is developed in chapter 2. The inventory model was solved using estimates of the total variable cost of storage in 1973/74. Only the variable costs were calculated because the permissible range of carryover was restricted to the excess capacity of the grain-handling system. Thus the model represents no particular period in time, but is a useful abstraction because it permits inferences about past and future wheat storage policy. Chapter 3 is concerned with the statistical analysis and simulation of the price series. The excess capacity of the grain handling system and the variable costs of storage are estimated in chapter 4. The results of the study are presented in chapter 5 and the major conclusions are summarised in chapter 6. Appendix I contains five computer solutions of the inventory model; appendix II contains the total variable cost of storage function. Appendix III contains a listing of the computer program.