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Equity investment in agricultural cooperatives (co-ops) is typically limited to farmer-members; yet farmers are usually cash-constrained. In addition to the common stock that is held by farmer-members, many co-ops are changing their financial structure by raising equity from external investors. This helps co-ops to collect capital, but also brings to the fore the conflicting benefits of farmers and external investors. In this paper, we develop a two-stage game-theoretic model to examine a start-up co-op's farm-gate pricing and financing strategies, considering two types of external fund: preferred stock that bears a fixed return rate and outside stock that shares the net profit (in proportion to equity) with common stock. We characterize the co-op's strategies in different scenarios and generate the following insights. First, while both types of external equity outperform the case with common stock only, the preferred stock generally outperforms outside stock due to its lower financial cost, higher tolerance for fund size limits, and flexibility in setting farm-gate prices. However, outside stock can outperform preferred stock if it allows a higher fund size limit. Second, the co-op's financial strategy exhibits a similar structure in equilibrium regardless of whether it is preferred stock or outside stock, despite their distinct financial terms. Finally, farm-gate pricing has a unique role in co-ops affecting the returns to farmers and external investors, which also highlights the conflicting roles of farmers as both patrons and investors when external equity is used. [ABSTRACT FROM AUTHOR]

This paper studies the financial and risk management specific to agricultural cooperatives (co-ops). In order to acquire the necessary risk capital to implement competitive strategies, like value-added processing, many agricultural co-ops are adopting capital structure innovations. Fonterra, a leading and dominant company in the New Zealand dairy industry, is one such typical case. We propose a Markov decision process (MDP) model for Fonterra to make better decisions, taking into account uncertain information on milk supply, share price, milk price and farmers' investment behaviour.The objectives are to maximise equity holders' returns over time and also to minimise financial risks. Themodel is solved through an approximate dynamic programming algorithm. We also investigate the efficiency of several risk management policies through numerical experiments. The results reflect the trade-offs involved in the financial decisions, show the importance of designing effective risk management policies and yield some suggestions to mitigate financial risk. [ABSTRACT FROM AUTHOR]

This study examines the effect of changes in the number of shipping lines on port charges and profits. A two‐stage noncooperative game‐theoretic model with two ports and multiple identical shipping lines is developed. In the first stage, the ports decide their container handling charges, and in the second stage, the shipping lines decide on the number of calls to make at each port, given the port charges. The model is then applied to the case of competition between two ports in New Zealand, the Port of Tauranga and the Port of Auckland, to derive managerial insights. Our study extends the literature on port competition by incorporating competition between shipping lines. We also demonstrate that a decrease in the number of shipping lines may force ports to increase their handling charges. Furthermore, we show that each shipping line ships more cargo than the industry optimal via the port with lower costs. [ABSTRACT FROM AUTHOR]

Most developed countries hold significant quantities of medical supplies in reserve for emergency response. Due to high handling costs and remote storage locations, such stocks are typically not used for day‐to‐day operations. In consequence, the expiry of reserve supplies (without use) is a significant problem. One possible remedy for such wastage is to donate large batches of dated supplies to developing nations, which often do without adequate medical supplies in their health systems. Here, we focus on personal protective equipment (PPE) and similar products, which have low risks associated with aging and safety. However, the international community is cautious about donating dated medical supplies, with the World Health Organization explicitly recommending against it. Issues of safety, while important, are not the primary concern as recent studies have shown expiration dates to be conservative. Instead, most concerns relate to macrolevel effects on the recipient country. Taking safety as given, we carefully model the incentives in the medical supplies donation supply chain, providing insights into the likely effects of corruption and impacts on the local industry. Overall, we find that the impact of donation is not monotone in the quality of donated products. In particular, dated donations whose quality is slightly lower than the quality of products in the local market are likely to be more beneficial than fresh donations; thus, we suggest that the international community reconsiders its stand on banning donations from dated reserves. We provide concrete guidelines for such donations and suggest a possible path for implementation of a donation program. [ABSTRACT FROM AUTHOR]

This paper provides procedures for setting optimal, or near-optimal, basestock levels in a multi-product system with setups and random yield. The procedures are derived using a novel polling system model of the system that contains both queues for production order and queues for temporary storage of rework orders with routing occurring between these two types of queues. Both systems with backlogging and lost sales are analyzed using existing work on polling models with routing and possibly finite buffers. For a system with backlogging, we provide a cost function that is minimized by solving a set of single-item newsvendor problems. In systems with lost sales, each queue is given a finite buffer equal to the basestock level and excess demand is lost. We provide a cost function and show that finding optimal solutions for large problems is not tractable; thus, we provide a heuristic for finding the basestock levels and demonstrate the effectiveness of the heuristic and accuracy of the cost approximation through numerical tests. Keywords: Basestock, random yield, multi-product, setups, 1. Introduction Most production systems are characterized by multiple uncertainties, which cause output to be highly variable. When yield is random, not only is the usable quantity uncertain, but the [...]

The viability of finite buffer polling model with routing is examined.

We consider a two-stage supply chain under centralized control. The downstream facility faces discrete stochastic demand and passes supply requests to the upstream facility. The upstream facility always meets the supply requests from downstream. If the upstream facility cannot meet the supply requests from inventory on hand, the shortage must be filled by expediting, which will incur per unit and setup costs. Such expediting may take the form of overtime production, which occurs at the end of the period and incurs relatively high production costs, or premium freight shipments, which involves building products at the beginning of the period they are needed and shipping them very quickly with relatively high shipping costs. We consider the case where one method of filling shortages is available and determine novel optimal inventory policies under centralized control. At both stages, threshold policies that depend only on the current inventory in the system are optimal; for the total inventory in the system, a base-stock policy is optimal. Numerical analysis provides insight into the optimal policies and allows us to compare the supply chains under centralized and decentralized control. (Expediting; Overtime; Supply Chain Coordination; Inventory; Markov Decision Processes), 1. Introduction In traditional supply chain situations, downstream facilities make decisions about their order quantities without regard to the actual inventory available upstream. If the upstream facilities do not have [...]

This paper models a type of vendor-managed inventory (VMI) agreement that occurs in practice called a (z, Z) contract. We investigate the savings due to better coordination of production and [...]

It is a great pleasure to announce that the 2010 Manufacturing & Service Operations Management Best Paper Award goes to Xuanming Su for 'Bounded Rationality in Newsvendor Models' (2008). This [...]