SummaryIn many industrial processes an operative attends a number of machines which stop from time to time. Each time a machine stops the operative has to do a certain amount of work before it can be restarted. If at any time two or more machines are stopped simultaneously, there will be a loss of production due to the period the machines have to wait for attention. In this paper we derive methods of estimating this loss of production when the operative has no duties away from the machines and discuss modifications to the theory when the operative has other duties.
A stochastic budget simulator and generalized stochastic dominance are used to compare the risk management properties of grazing contracts to futures and option contracts. The results show that the risks of backgrounding feeder cattle are reduced significantly for pasture owners in a grazing contract. However, the risks of the cattle owner in a grazing contract are not significantly reduced. The results also show that generally risk averse pasture owners prefer grazing contracts to integrated production when traditional hedging is used to manage price risks. In addition, grazing contracts compare favorably with put option contracts for some pasture owners.
A PREVIOUS paper has described the problem of estimating the loss of production due to interference when an operative is required to attend a number of machines. The present paper discusses the necessary modifications to the theory when the operative has other duties.
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