Simulation-Based Optimization for Decision Making Under Uncertain Production Environments

Anderson E. Xicay, Samuel D. Zapata, Manuel Garcia and Peter Omara

No 404700, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: Agricultural decision-making is inherently challenging, as producers must choose among alternative management strategies while outcomes depend on uncertain climatic, production, and market conditions, making it difficult to identify practices that balance expected profitability and risk exposure. This study proposes a simulation-based optimization framework that integrates a production function with stochastic economic scenarios to evaluate management strategies across multiple plausible conditions. The methodology is illustrated through an empirical application to nitrogen fertilization decisions in wheat using long-term experimental data from Oklahoma, USA. Preliminary results show that the simulationoptimization model recommends a higher nitrogen application rate and achieves higher average and median returns relative to benchmark and ensemble approaches. In addition, the framework generated the best economic outcome in 66% of evaluated scenarios, compared with 29% for the ensemble model and 5% for the benchmark model. However, these improvements are accompanied by greater return variability, suggesting a potential trade-off between economic performance and outcome stability.

Keywords: Production; Economics (search for similar items in EconPapers)
Pages: 10
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/404700/files/1 ... ion_Environments.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404700

DOI: 10.22004/ag.econ.404700

Access Statistics for this paper

More papers in 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().