Effects of Supply Variations on Costs and Profits of Slaughter Plants

Lawrence A. Daellenbach and Lehman B. Fletcher

American Journal of Agricultural Economics, 1971, vol. 53, issue 4, 600-607

Abstract: Preferences of the firm for stable or varying flows of raw products are considered. A decision model involving rate and hours of plant operation is developed to measure the, impact of supply variations on plant costs and profits. Situations in which the firm can and cannot predict raw material receipts with certainty are simulated. Varying supplies were found to raise costs of slaughter, but plants with stable supplies lose profits as long as product and input prices vary. Therefore individual firms, especially those that can forecast with a high degree of success, are unlikely to prefer stable to varying supplies.

Date: 1971
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