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Purdue Agribusiness Management Simulation

Freddie Barnard Department of Agricultural Economics Purdue University. Purdue Agribusiness Management Simulation. Objectives. Overview of the simulation Management tools taught Contact information Demonstrate the simulation - after the session. Overview.

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Purdue Agribusiness Management Simulation

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  1. Freddie Barnard Department of Agricultural Economics Purdue University Purdue Agribusiness Management Simulation

  2. Objectives • Overview of the simulation • Management tools taught • Contact information • Demonstrate the simulation - after the session

  3. Overview • Updated Purdue Farm Supply Game • Farm supply store - sells feed and fertilizer • Students divided into ‘teams’ • Teams are divided into ‘markets’ • Three interest rate scenarios

  4. Teams • Four positions per team General Manager Inventory Manager Labor Manager Cash Manager • A decision form is completed each decision

  5. Simulation Time • Each decision represents one quarter • Maximum simulation time is 12 quarters • Sales vary from quarter to quarter • Students provided sales records for previous 3 years

  6. Product Sales • Each store sells the same four products Complete feed Concentrate feed Commercial grade fertilizer Custom blend fertilizer • Lost sales are reported as unfilled orders • Emergency orders

  7. Simulation Objective • All stores start from an identical financial position • Profits determine the winning team • All profits are retained over the entire simulation time and determine the winning team

  8. Decision Variables • Product prices • Product orders • Emergency orders • Advertising • Credit policies • Storage/truck purchase vs. rent • Labor • Borrowing • Repaying loans • Investing

  9. Decision Form

  10. Results • Income Statement – current quarter (per ton and percentage of sales) and past 12 months • Balance Sheet • Sales Report • Storage, Truck and Labor Utilization Report • Actual Cash Flow • Market Share Report

  11. Management Tools Taught • Cash Flow – Pro Forma and Actual • Breakeven • Profitability Linkage Model–Comparisons Over time Peer group data • Pro forma Balance Sheet and Income Statement

  12. Materials Available • Software • Manual • Forms

  13. Contact Informaiton Freddie Barnard Department of Agricultural Economics Purdue University 403 W. State Street West Lafayette, IN 47907 barnardf@purdue.edu (765) 494-4242

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