Each cereal crop requires some investment at the beginning of the season for seeds and fertilizer (called “initial cash outlay” in the table below) and each yields a different revenue at the end of the season: the revenue from crops depends on the yield per acre (expressed in bushels per acre) and the selling price of the crop (expressed in $ per bushel).
Cost data from Guidelines for Estimating Crop Production Costs in Manitobaand selling price data from the United States Department of Agriculture
Similarly, cattle are purchased at the beginning of the season for $ 650 and sold at the end of the season for $ 1,350. Each cattle head requires 2.5 acres of land (on which the farm grows hay) and 25 bushels of corn before it is sold. The poultry are purchased as male chicks at the beginning of the season for $ 1 and sold at the end of the season as capons (castrated roosters) for $ 8.50. Their feed consists of 0.2 bushel of corn. If corn needs to be purchased to feed the animals, it costs $ 3.65 per bushel.
At the beginning of the growing season, the farm has $ 126,000 in funds available to purchase seeds, fertilizer, chicks and calves. It does not purchase feed for the animals with these funds, nor does it pay its employees from these funds.
The chicken coop can accommodate a maximum of 30,000 chicks, and the size of the barn limits the herd to a maximum of 80 heads of cattle.
The farm’s management team does not want a single cereal crop to represent more than 25 percent of the entire tilled acreage. This excludes cattle, even though cattle uses up some acreage, because the acreage for cattle is not tilled.
The farm relies on inexperienced and experienced labor for its operations: inexperienced employees can produce a total of 1,000 labor hours during the winter months (mid-September to mid-May) and 2,500 hours during the summer. They are paid $ 15.00 per hour; experienced employees can produce a total of 500 hours during the winter months and 2,000 during the summer months. They are paid $ 20.00 per hour.
These employees need supervision to the tune of 0.25 hours of supervision for each hour of inexperienced labor worked and 0.1 hours of supervision for each hour of experienced labor worked. Management can provide up to 300 hours of supervision for this labor in the winter and 700 in the summer.
The farm wishes to determine how much acreage should be planted in each of the crops and how many heads of cattle and hens should be kept to maximize its profits.
|
Barley |
Wheat |
Corn |
Oats |
|
|
Initial Cash Outlay ($ per acre) Yield (bushels per acre) Value of a bushel ($) |
$183 60 $4.45 |
$201 65 $6.00 |
$315 180 $3.45 |
$161 70 $2.50 |
|
Barley |
Wheat |
Corn |
Oats |
Cattle |
Hens |
|
|
Labor hours required per acre in winter Labor hours required per
acre in summer Labor hours required per head in winter Labor hours
required per head in summer |
2 5 |
1.5 4 |
2 4 |
2.5 5 |
10 15 |
0.01 0.05 |
You are to write a memo that summarizes your findings to Fred Guillot, the general manager of the Sunny Acres Farm, and your direct supervisor; in this memo, you should let him know how many acres the farm should plant in each type of crop, how many animals it should raise, and how many hours of experienced and inexperienced labor it should hire in the winter and summer to operate the farm.
You should also state what the earned profits that the farm should anticipate if it follows your recommendations.
This memo must be written in correct and proper English. Make sure the tone of the memo is respectful and professional.
You are a new hire for the farm, and your position is that of “business analyst.”
Your memo should be accompanied by the output of the Excel spreadsheet, printed on asingle p
