- - AGRICULTURAL CORE CURRICULUM - -

(CLF1000)  Advanced Core Cluster: AGRICULTURAL BUSINESS MANAGEMENT

  (CLF1250)  Unit Title:  MANAGEMENT FUNCTIONS

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  (CLF1255)  Topic:  Decisionmaking             Time               Year(s)
                                               1 Hour              3 / 4
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           Topic Objectives:  Upon completion of this lesson, the student will 
                              be able to:

           Learning Outcome #:

                (Q-1)  -  List the management available decisionmaking aids.

                (Q-2)  -  Describe the benefits of a microcomputer in the 
                          decisionmaking process.

                (Q-3)  -  List publications available to aid in 
                          decisionmaking.

                (Q-4)  -  Describe the latest aids available in marketing 
                          crops and livestock.

           Special Materials and Equipment: 

           References:  Hamilton, W. H., Connelly, D. F., & Doster, D. H. 
                          (1992).   AGRIBUSINESS:  AN ENTREPRENEURIAL 
                          APPROACH.  Albany, NY: Delmar Publishers.
                        Luening, R. A., Klemme, R. M., & Mortenson, W. P. 
                          (1991).  THE FARM MANAGEMENT HANDBOOK (7th ed.).
                          Danville, IL: Interstate Publishers.

           Evaluation: Quiz by instructor and participation in activities

TOPIC PRESENTATION:  DECISIONMAKING

A.  What is Decisionmaking?

    1.  Decisionmaking is a process of choosing between several alternative in 
        order to achieve a desired result.

    2.  Classifiction of Decisions

        a.  Importance

            1)  Decisions vary in importance.

            2)  The relative importance of a decision is measured by the 
                amount of potential gain or loss involved.

        b.  Frequency

            1)  How often does the decision need to be made?

        c.  Imminence (How soon will something happen?)


            1)  Can making the decision be delayed?

            2)  What will be the cost of delaying the decision?

            3)  If the cost of delay is not great, it may be better to acquire 
                more information before he decision is made.

        d.  Revocability

            1)  Once made, what is the cost of cancelling or changing the 
                decision?

            2)  Do the costs of changing the decision outweigh the benefits?

        e.  Available Alternatives

            1)  How many choices are available?

B.  Steps in the Decisionmaking Process

    1.  List the possible alternatives or outcomes.

    2.  List the pros and cons of each alternative.

    3.  Evaluate the potential net effects of each alternative.

    4.  Decide.

C.  Management Decisionmaking Aids

    1.  Records

        a.  Balance sheets

            1)  Know how the assets and liabilities are affected by the 
                decision.

            2)  Avoid a 1 to 1 asset to liability ratio.

        b.  Profit and Loss Statements

            1)  Compare the performance over time.

            2)  Is performance improving or declining?

        c.  Sales Reports

            1)  Compare current and past sales reports.

            2)  Sales records assist in production planning and inventory 
                control.

        d.  Cash Flow Summary

            1)  Availability of cash at different times of the year can be 
                determined in advance.

            2)  Cash flow records allow a manager to plan for short-term 
                credit.

        e.  Accounts Payable and Accounts Receivable

            1)  Accurate and up-to-date records allow planning for payment of 
                bills at times which permit minimum borrowing and maximum
                discounts for early payment, i.e., cash flow planning.

            2)  Accurate and up-to-date records provide information about
                creditworthiness and net worth.

        f.  Production Records

            1)  Livestock

                a)  weaning weights

                b)  yearling weights

                c)  milk production records

                d)  birthing interval

                e)  litter size

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          ACTIVITY:  

          1.  Study sire summary or sire proofs.  Given the past 
              performance or production records of certain cows, 
              make mating decisions for three examples.  Justify
              each of the decisions.
          __________________________________________________________

            2)  Crops 

                a)  yield per acre

                b)  cost of production per acre

                c)  cost of water per acre

                d)  cost of fertilizer per acre

                e)  cost of production per ton

                f)  cost of planting

    2.  Consultants

        a.  County Farm Advisor

        b.  Private management or consultant service

        c.  University personnel

        d.  Field men from suppliers

        e.  Other producers

C.  The benefits of a microcomputer in the decisionmaking process:

    1.  Properly used, it saves time.

    2.  It allows access to large information databases with a phone modem.

        a.  Crop production forecasts, futures prices, and other marketing
            information are available via modem.

    3.  It allows a manager to organize, access, and analyze production and
        financial records.

================================NOTE TO INSTRUCTOR============================
The use of computers in agriculture recordkeeping and accounting are discussed in lesson CLF1103 (Agricultural Recordkeeping and Accounting), units CLF1300 (Agribusiness Accounting) and CLF1350 Financial Planning and Analysis.
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D.  Publications as Aids in Decisionmaking

    1.  Textbooks are sources of basic factual data needed for decisions.

    2.  Trade magazines and newsletters provide up-to-date news about
        events and new developments in the field.

    3.  Product descriptions provide information about products that are
        currently available on the market.

    5.  Other miscellaneous publications (for example, from Cooperative
        Extension offices) provide data on a wide variety of subjects.





12/12/91 JA/EEZ/sg


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