Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Activity 10 AGB 421 Dr. Sean Hurley 200 Points Due: 6/2/09 Learning Objectives To learn how to simulate a business environment using Excel To pull together data from many different sources to create a business model To do research to find needed information To understand using the Rand() function in Excel Introduction: Today’s activity will familiarize you with using Excel’s ability to assist in simulating a business environment to develop strategies for producing. You will be required to gather and analyze data from a USDA website and the UC Davis cost studies website. To get full credit, you need to submit any spreadsheet you created and any write-up should be in a text box in Excel. Suppose you have been hired by an overseas investor who would like to start a farming operation in the Imperial Valley. This investor would like your advice as to what would be the proper crop mix to grow on her three thousand acres of land she purchased in Brawley, CA. This producer has experience growing Durum Wheat, Upland Cotton, and Sugar Beets. It is your job to examine an optimal strategy regarding how much of each she should plant to be long-run profitable. To do this analysis, the investor would like you to take into account both price and yield risk. You have decided that the best way to examine this issue is to simulate the business environment and explore different scenarios. To start your analysis, you need to find information regarding prices and yields of Upland Cotton, Sugar Beets, and Durum Wheat . One location of this information is at: http://www.nass.usda.gov/. On this site, you should be able to find information regarding apple prices on the US and State Data pull down menu. The information you are interested in is on the US & States – Crops under the Planted, Harvested, Yield, Production, Price, (MYA), Value of Production Scroll Down Menu. Make sure you gather information for California only and that you examine state numbers rather than county numbers. Copy each set of data into a worksheet that has the title of the crop. (10 Points) In a new a new worksheet entitled All Crops, copy and paste each crop into it. Next delete all columns that have the following titles: Commodity_Code, State, StFips, Planted All Purpose, Planted All Purpose(Unit), Harvested, Harvested(Unit), Value of production, Value of Production(Unit). (10 Points) In your Crops worksheet, you need to associate each column with the crop it is related to and the units it is related to. An example of one of the title headings is “Wheat Durum-Yield-bushels”. Once you have all of the columns changed, delete the columns entitled Commodity and any column that has (Unit) in it because these are no longer needed. (10 Points) Next, you want to get the years of each crop to align with each other. Move the data around to accomplish this task. After the crops are aligned for each year, you should delete the columns for Cotton Upland-Year and Wheat Durum-Year. Finally, call your Sugar Beet-Year column Year. Delete the row related to year 2009 since you do not have data for each crop in that year. (10 Points) In a new worksheet entitled Value of production, copy and paste the data from your Crops worksheet. In your analysis, exclude all years that you cannot calculate a value of production. Calculate the value per acre per year for all three crops. Next run a correlation on the three crop values per acre. (Note: if you used a filter to get the data you are analyzing, you may find that the correlation option in the Data Analysis Tool may not calculate the correct correlations. Please explain your results in a text box. (20 Points) In your worksheet entitled Value of Production, create a set of descriptive statistics for each of the crops. Also make a scatter plot that has years on the horizontal axis and value of production for each crop on the vertical axis. In a textbox, explain you results. (20 Points) Create a set of descriptive statistics for each of your columns (except Year) on your Crops worksheet. Since you only have price data from 1978 to 2007, make sure you run your statistics based on these years. (10 Points) Now that you have a better idea of your yield and price data which will allow you to get at the revenue for each crop, you want to collect information on costs related to each crop. You will find this information located at http://coststudies.ucdavis.edu/current.php. You want the data related to Imperial Valley Wheat by flood irrigation, Imperial Valley Cotton, and Imperial Valley Sugar Beets. The information that is of interest to you is the Cost per Acre-Output worksheets. Copy and paste this information into worksheets entitled Wheat Cost, Cotton Cost, and Sugar Beet Cost. (10 Points) Create a new worksheet entitled Farm Profits. In this worksheet, title you first column Model Inputs and your second column should be Value. In the first column, put Acres to Cotton, Acres to Wheat, Acres to Sugar Beets, Average Price of Cotton, Average Price of Wheat, Average Price of Sugar Beets, Standard Deviation of Price for Cotton, Standard Deviation of Price for Wheat, Standard Deviation of Price for Sugar Beets, Average Quantity of Cotton, Average Quantity of Wheat, Average Quantity of Sugar Beets, Standard Deviation of Quantity for Cotton, Standard Deviation of Quantity for Wheat, Standard Deviation of Quantity for Sugar Beets, Cost to Produce Cotton, Cost to Produce Wheat, and Cost to Produce Sugar Beets in the rows below the title. (20 Points) In the Value column, put 1000 next to each of the following: Acres to Cotton, Acres to Wheat, and Acres to Sugar Beets. Next take information from your Descriptive Statistics that you got from your Crops worksheet and information you have in your Cost worksheets and propagate the following items: Average Price of Wheat, Average Price of Sugar Beets, Standard Deviation of Price for Cotton, Standard Deviation of Price for Wheat, Standard Deviation of Price for Sugar Beets, Average Quantity of Cotton, Average Quantity of Wheat, Average Quantity of Sugar Beets, Standard Deviation of Quantity for Cotton, Standard Deviation of Quantity for Wheat, Standard Deviation of Quantity for Sugar Beets, Cost to Produce Cotton, Cost to Produce Wheat, and Cost to Produce Sugar Beets. Name the value in each cell the corresponding name in Column A. (20 Points) Your next goal is to create price and quantity columns for each crop. The prices and quantities need to be random draws from the normal distribution using the averages and standard deviations for each crop. You can do this by using the Norminv() function in Excel. Create 10,000 of each of these. (10 Points) Next calculate the revenue and profit for each crop for each random draw of prices and quantities. You need to incorporate the acreages that you will be initially allocating to each crop, i.e., 1000 each. Create a summary of the average profits for each of the crops and show the results summarized in column A underneath your other model inputs. Please summarize your results in a text box. (20 Points) You should notice that none of your crops are profitable. The primary reason is that you have not adjusted your prices for inflation. Since you do not have easily accessible price deflators to deal with the issue of inflation, you decide to examine the last ten years of data rather than the last thirty years. Change your model to deal with this new situation. Under this new situation, see if you can figure out an optimal allocation of acreages to your different crops. Do this for your maximum prices and quantities using the original standard deviations for each. You should use Scenario Manger to assist with this analysis. (20 Points) In a text box, summarize your new results and what you have found. One point will be deducted for each spelling and each grammatical error. (10 Points)