Procurement Strategies to Improve Quality Consistency in Wheat Shipments
By: Wilson, William W.; Dahl, Bruce L.
Wilson, William W.; Dahl, Bruce L., Procurement Strategies to Improve Quality Consistency in Wheat Shipments, Journal of Agricultural and Resource Economics, Volume 33, Issue 1, April 2008, Pages 69-86
Consistency of functional characteristics in wheat is a concern confronting buyers and sellers. This research analyzes the cost and risk of different procurement strategies for importers. A stochastic simulation model is used to determine the probability of functional characteristics being satisfied subject to quality targets and costs for alternative purchase strategies. Stochastic efficiency was employed to identify purchase strategies that dominate others and to determine the extent of preference. As more specific characteristics are incorporated into a contract, results indicate that the probabilities of meeting end-use requirements increase