Profit Optimization of Cattle Growth with Variable Prices

Abstract

We apply a class of stochastic diferential equations to model the growth of individual animals in randomly fuctuating environments using real weight data of males of the Mertolengo cattle breed. The use of these more realistic models can help farmers to optimize their proft. To this end we obtain the probability distribution, the frst two moments and others quantities of interest of the proft obtained by raising and selling an animal under the more general, and more realistic, situation where the raising costs and the price per kg paid to the farmers depends on the animal’s age and weight category. We also present sensitivity results on how the expected proft and the optimal selling age vary with small changes on the estimates of the model parameters. We conclude that farmers are selling the animals a little earlier than the optimal selling age, which results in a lower proft per animal. The sensitivity analysis of the parameters shows that small changes on the parameters result in very small efects on the optimal proft and negligible efects on the optimal selling age.