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DECISION MAKING
IN AN
INTEGRATED SHELL EGG
PRODUCING FIRM
WITH THE AID OF
SMALL COMPUTERS

BY

Glenn Harold Carpenter

A DISSERTATION

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY
Department of Poultry Science

1983

ABSTRACT

DECISION MAKING
IN AN
INTEGRATED SHELL EGG
PRODUCING FIRM
WITH THE AID OF
SMALL COMPUTERS

BY

Glenn Harold Carpenter

The face of the United States egg industry has been
characterized by continual change during the last forty
years. with a movement from small back-yard flocks to huge
production complexes involving many thousands of dollars of
investment. As a result of this change, firm management has
become more complex; and this complexity has brought about
the need for a great deal of timely, clearly set forth
information to aid in the firm's decision making. Fast and
accurate flows of information enhance the decision making
process. The computer can be an important tool in
faciliting the accumulation of data and flow of information
within the firm.

Since modern day egg producing firms are becoming more
and more complex, attempts were made to identify the
problems whidh managers face in the operation of the firm,
and to identify the information which managers need to make

the correct decisions to solve these problems. Since the

GLENN HAROLD CARPENTER
information needed for decision making should be encouraged
and enhanced in such a way that decision making is
facilitated, and since the computer is an excellent tool to
be used in aiding this flow of information, the possible
uses, in firm management, of today's small computer systems
was studied in an attempt to match specific types of small
computer software with the needs of particular levels of
managers within the firm.

The dissertation concludes that there are three levels
of decision makers within the integrated shell egg producing
firm, and that the types of decisions which are to be made,
the information needs for making these decisions, and the
possible uses of the small computer in manipulating and
generating this information are all dependant on a

particular managers level of decision making.

ACKNOWLEDGMENTS

The author wishes to thank Dr. Allan Rahn, Associate
Professor of Animal Science, for his assistance, guidance,
and friendship throughout the course of his doctoral
program. The author would also like to thank the members
of his guidance committee, Drs. Cal Flegal and Theo Coleman
of the Animal Science Department, and Dr. Mike Kelsey of the
Department of Agricultural Economics for their help and
suggestions.

Most of all, the author wishes to thank his parents for
their moral support throughout the course of his graduate
study, and for teaching him, at an early age, the importance

of an education. This dissertation is dedicated to them.

ii

TABLE OF CONTENTS

LIST OF TABLES.‘ O O I O O O O O O

LISTOFFIGURES.........

Chapter 1. Introduction. . . . . .

1.1

1.2

1.3

1.4

Increasing Complexity of Poultry Business

Management 0 O O O O O O O 0

Increase in Amount and Types
Information. . . . . . . . .

Computer as a Tool in Making

Objectives . . . . . . . . .

Chapter 2. Review of Literature. .

2.1

2.2

Decision Making. . . . . . .

Information Systems. . . . .

2.3 Computer Usage . . . . . . .

Chapter 3.

3.1 An Integrated Shell Egg Producing Firm .

of

Decisions

The Integrated Shell Egg Producing

Firm, Firm Decision Making, and
Computers and Software Design . .

3.2 Decision Making and Problem Solving .

3.3 Computers and Software Design. . . . .

Chapter 4. Decision Making and Computer Usage
Within the Firm . . . . . . . . .
4.1 General Manager. . . . . . . . . . . .

4.2 Financial Operations . . . .

 

17

23

36

36

42

51

8O
81

85

TABLE OF CONTENTS

4.3 Hatchery Operations. . . .

4.4 Feed Production. .

4.5 Egg Production . .

4.6 Egg Processing and Marketing

Chapter 5.

Chapter 6.

Summary . . .

(CONTINUED)

Conclusions and Comments. . . . . .

Appendix. . .

Bibliography.

iv

PAGE
93

100
106
111

120

128

133

148

Table

10

11

11

11

LIST OF TABLES

Characteristic Differences in Levels of
Decision=Making. . . . . . . . . . . . . . .

Application Software Evolution . . . . . . .

The Growth in Personal Computers and
Personal Computer Software from 1979
and Projected to 1990 . . . . . . . . . . .

Selected Small Business Computers. . . . . .

Selected Disk Operating System Software,
Software Developer, Availability, and
Price Range. . . . . . . . . . . . . . . . .

Selected Telecommunications Software,
Software Developer, Availability, and
Approx imate Price 0 O O O O O O O O O O O O 0

Selected Data Base Management Software,
Software Developer, Availability, and
Price Range 0 O O O O O O O O O O O O O O O 0

Selected Word Processing Software, Software
Developer, Availability, and Price Range . .

Selected Computer Worksheet Software,
Software Developer, Availability, ,
and Pr i Ce Range 0 O O O O O O O O O O O O O 0

Selected Accounting Programs for Small
Computers and Vendors from Which They May
Be Obtained. . . . . . . . . . . . . . . . .
Selected Financial Management Software

for Small Computers Which May Be Useful

to Egg Producers . . . . . . . . . . . . . .
(Continued 1). . . . . . . . . . . . . . . .

(Continued 2). . . . . . . . . . . . . . . .

Page

52

55

S6

57

61

62

64

66

67

73

74

75

12

12
12
13

LIST or TABLES (CONTINUED)

Selected Small Computer Software Which

May Be of Use to Egg Producers .

(Continued 1). .

(Continued 2). .

Decision Types and Examples,

Producing Firm .

vi

Information
Needs, and Software Needs by Level of
Management of the Integrated Shell Egg

77

78

79

127

LI ST OF FIGURES

Figure Page

1

Firm Structure of an Integrated Shell Egg
Producing Firm . . . . . . . . . . . . . . . . 37

The Decision Making/Problem Solving Process
with Information Flows Between Steps . . . . . 43

Levels of Decision Making. . . . . . . . . . . 50

vii

CHAPTER 1.

INTRODUCTION

 

1.1 Increasing Complexitygf Poultry Business
Management

 

 

 

The face of the United States egg industry has been
Characterized by continual Change during the last forty
years. Egg production has changed from small backéyard
flocks to huge production complexes involving many thousands
of dollars of investment. In the period from 1964 to 1969
the number of U.S. farms reporting laying birds declined
more than 60 percent: in the period from 1969 to 1974 this
trend continued with a drop of about 32 percent from 1969
levels (Schrader et al., 1978). This trend has not been
brought about by a reduced U.S. egg producing flock, but by
increasing concentrations on the part of the egg producing
subsector of CLS. agriculture. A 1978 survey indicated that
25 percent of DAL laying hens were controlled by the 34
largest egg producing companies (Anonymous, 1978L.Due to
better bird management, better nutrition, and a better
genetic base, todayWs layers produce far greater numbers of
eggs than did those of just a few years ago. This rapidly
changing technology within the egg production industry has

resulted in economies of egg production which have allowed

the real price of eggs to decrease over time (Anonymous,
1966; Schrader et al., 1978).

These production efficiencies would not have come about
as rapidly if traditional agriculture, independantly
organized into autonomous decision making units, had
prevailed. New technologies in production made it possible
to separate out the routine, repetitive jobs so that they
could be centrally supervised and efficiently performed by
relatively unskilled labor. Skilled management could thus
be spread widely over the firm while less skilled managers
took care of individual production or processing tasks
(Anonymous, 1966). This separation of skilled and unskilled
managerial functions in egg production led to horizontal
integration, which is the replication of production units at
the same stage of production (Mighell and Jones, 1963).

Because of the competitive nature of the egg industry,
new efficiencies have had to be continually introduced into
the system. Efficiencies associated with horizontal
integration were somewhat limited and firms in the egg
production business had to expand into other areas of the
market channel in order to achieve a greater number of
efficiencies.

Vertical coordination is the forward or backward
movement, in the market channel, of a firm in order to gain

some cost advantages in production or marketing. Vertical

integration is a form of vertical coordination, but is
characterized by the degree of control. A vertically
integrated firm has a great deal of control over its
supplies and/or its markets because of the fact that it owns
them or maintains a strong Contractual or managerial
arrangement with them (Nelson et al., 1973). The increased
effectiveness of the firmfs performance comes as a result of
increased economies of size or of the control of more market
variables (Jones and Smalley, 1966). An egg producing firm
which has reaped the benefits of integrating horizontally
can become a more effective competitor by moving backward in
the market channel into feed production and/or pullet
production, or forward in the market channel into the

processing, wholesaling, and retailing of eggs.

1.2 Increase ig Amount and Types 2; Information

 

 

 

As a result of integration in the egg industry, firms
have become larger and much more complex. This complexity
has brought about the need for a great deal of timely,
clearly set forth information to aid in the firmfls decision
making. In years past, before the onslaught of integration,
one person could directly oversee the management of the
whole system with which he was involved. Now, with the
entire system typically encompassing several stages of the

market Channel, it is not within the abilities of one person

to remain completely in control of all of the firm.

To maintain control of the entire system, the scope and
timeliness of information moving between one area of the
firm and another has become crucial. Fast and accurate
flows of information enhance the decision making
process.Barriers to fast and accurate flows of information
should be at a minimum to achieve a well managed integrated

shell egg producing firm.

1.3 Computer a§_g Tool 13 Making Decisions

 

 

A computer can be an important tool in facilitating the
accumulation and flow of information within the firm. The
potential role of the computer has changed from that of a
large adding machine used almost exclusively for keeping
accounting records to that of a very viable tool in aiding
managers in the decision making process.

Since the mid 1970's, the development of micro
processor technology has put the purchase and operation of a
computer within the grasp of even the smallest firm. These
"microcomputers" have become increasingly powerful as well
as less expensive (per unit of memory) and now .can become an
integral part of the-firmfs decision making team.

Whereas the availability of computers to take part in
the decision making process has increased, the availability
of computer software to aid in decision making has lagged,

somewhat. Prior to the introduction of microcomputer

technology, computer usage by poultry businesses had often
been limited to financial record keeping by the firm's
accountant, in a time sharing mode of operation, or to the
use of simulation-type programs provided by Land Grant
universities. With the advent of the new small computers,
software will have to be designed which will allow the small
computer to become an essential tool for the firrfls decision

making team.

1.4 Objectives

 

Since modern day egg producing firms are becoming even
more complex, a study of the decision making process at each
level of firm management can aid scientists and university
extension specialists in identifying the needs and problems
of managers. Therefore, an objective of this dissertation
will be to identify the kinds of decisions which must be
made at each level of an integrated egg production firm.

Effective decision making relies heavily on the flows"
and types of information availablezto the decision maker.
For this reason, a second objective of this dissertation
will be to identify the types and flows of information
needed to make each of the types of decisions, at each
management level of the firm.

Once the types and flows of information needed in the

decision making process are defined, then scientists can

find ways to encourage and enhance them. One way of aiding
the flow of information to the decision maker is with the
help of the computer. Since new technology has brought
about the possibility of many new uses for the computer, a
last objective of this dissertation will be to identify the
possible uses of the small computer in the decision making

process.

CHAPTER _2_

Review g£_Literature

 

This review of literature will be presented in three
sections, each of which is related to one of the three
objectives of this dissertation. The first section of the
Review of Idterature pertains to decision making. Whereas
there are several works to be cited, they are for the most
part from texts pertaining to decision making rather than
from scientific articles. Citations are more definition
oriented than are they to report the result of a particular
study.

The second section of the review of literature deals
with information systems. This section is similar to the
section on decision making in that most of the citations
define the author's concept of an information system rather
than describe the results of a particular study. Although
there is a great deal of textual material dealing with
either of these subjects, scientific literature (literature
describing the results of a particular study) pertaining to
either of them is lacking.

The third section of the review of literature deals

with computer uses in agribusiness. Much of the literature
cited describes past applications, when computer usage in
agriculture usually took the form of farm business
simulations run on a large mainframe computer by-the state
agricultural extension service. Present and future trends
in farm computer applications are also presented.

Note that for the purposes of this dissertation,
wherever the word "farm" is used, the word "firm" could just

as well be used. The converse is also true.

2.1 Decision Making

 

Decision making, as defined by Tosi and Carroll (1976),
is the act of choosing among alternatives. Decision making
is just one aspect of problem solving. The four steps to
problem solving are problem recognition, identification of
probable causes, generation of alternative solutions, and
deciding upon and implementing the chosen altenatives. Tosi
and Carroll state that the function of a manager is to
recognize a problem and make a decision. To do this, the
manager must know what the situation is like at the current
time, and what the situation should be like.

Johnson (1963) states that there are five steps in
problem solving. They are: observation, analysis, decision
making, action, and responsibility bearing.

According to O'Connor (1973), there are five steps to

the management process. These are: observation, analysis,
decision making, action taking, and acceptance of
responsibility; Decision making is the most important of
these managerial functions, but is not complete until action
is taken. It is in the action taking stage that most
managers fail.

The decision maker must define the problem very
carefully; Failure of the decision maker to make the correct
decision often stems from poor problem formulation due to
the conditions of imperfect knowlege under which the
decision maker must work. The decision maker should
carefully obtain as much relevant information as possible in
defining and stating a specific probLem whidh must be
solved.

Many people equate management with decision making
(Wills, 1973). Decision making is actually part of the
management process. Wills places five steps within the
management process. They are: define the problem, assemble
data pertinent to developing the solution, consideration of
various alternatives, data analysis and decision making, and
living with the decision.

In Managerial Decision Making, Morrell (1960) states

 

that decision making is the heart and core of
administration. It is the key to business success and to

the job of the manager. Decision making can only be as good

10
as the process used to reach it.

The decision making process includes four stages
(Morrell). The first stage is the stage of uncertainty,
when problem formulation takes place. The second stage is
the stage of analysis and definition, when relavent facts
are discovered. The third stage is the stage of proposal of
alternative plans of action. The fourth stage is the stage
of verification, whiCh is the period of uncertainty prior to
setting the decision into process when the decision maker
wonders if all the facts collected during stage number two
are correct.

Newman.(1971) defines decision making as a process that
includes: recognition of a situation that calls for a
decision, identification and development of alternative
courses of action, evaluation of alternatives, Choice of an
alternative, and implementation of'a selected course of
actiOnm The Choice of an alternative would be the actual
act of decision making, in this process.

In their book on decision making and management for the
farm and home, Malone and Malone (1958) define the decision
making process as a series of five steps. These steps are:
problem definition, data gathering and analysis, formulation
of choices, making a decision, and taking action. Decision
making, itself, is the process by which one choice is

selected from among those that are available, and is the

11

heart of management.

The Malones say that in decision making there are four
main ideas which farm family members should keep in mind.
The first idea is that there is a need for a system to
follow which will be flexible enough to suit the family.
The second idea is that there is a need to understand the
process by which good decisions are made. Related to this
is the third idea: that there is a need to understand and be
able to use the fundamental principles that influence the
making of good decisions. The fourth idea is that there is
a need to understand the role eaCh individual in the family
group plays and the way each member of the family group
functions in the decision making process. Keep in mind that
where the Malones talk about the farm family, we should be
able to substitute in the idea of the firm.

According to the Malones, all decisions affecting the
farm family fall into four decision groups. Price/market
decisions are those dealing with the purChase of production
inputs or the sale of the product of the farm family‘s
labor. The second group of decisions is that which deals
with the adoption of new methods or practices. Decisions
dealing with individuals outside the farm family circle make
up the third decision group. The fourth, and last, decision
group is that which deals with decisions within the farm

family circle. Again, the word "firm" can be substituted

12

for "farm family", for the purposes of this dissertation.

Kepner and Tregoe (1965) see the problem solving
process as a three part proposition. The process starts
with problem identification, moves on to analysis of the
problem, and ends with the act of making a decision. The
prdblem solver must select the deviations from the norm upon
which to work. If the cause of the problem is known, the
problem solver can directly make a decision. If the cause
of the problem is unknown, then the problem solver must
systematically gather and evaluate the information necessary
to indentify the cause of the problem.

This gathering of information pertinent to identifying
the problem involves four steps. First, the deviation must
be described by asking, "What is...what is not; where
isunwhere is not; and when isu.when.is not?" The second
step looks for distinctions between "is" and "is not".
Next” the problem solver must look for possible causes for
the deviation. Fourth, the problem solver must test for the
probable cause of the problem. Managerial ineffectiveness
in problem solving is usually the result of failure to
correctly identify the causes of the problem. This failure
to correctly identify the cause of the problem is the result
of a failure to obtain, to use, and to process,
systematically, the necessary information.

The decision maker must choose one of three possible

13

courses of action in correcting a problem. Interim action
results in a temporary solution which gives the decision
maker time to determine the cause of the problem.
Corrective action eliminates the cause of the problem.
Adaptive action changes the environment sudh that the
problem can exist with no disrupting influence on the
system.

Bentz and Hinton (1964) categorize decisions as either
short, intermediate, or long range. Short range decisions
are day to day general flock management decisions.
Intermediate range decisions deal with the operation of the
system for as long as two or three flock production cycles.
Such decisions as the length of time to keep a particular
flock in production or the brand of feed the farmer
purchases fall within this category. Short and intermediate
range decisions tend to keep managers busy. These types of
decisions make up the vast majority of all the decisions
with which the manager must be concerned. Long range
decisions are usually "one-shot" and either cannot be
Changed or cannot be changed quickly without having ill
effects on the financial position of the firm. Flock size
is a long range decision. Once this decision has been made,
and the house built, it cannot readily be changed until the
house, or equipment within the house, is replaced.

To be of value, say Bentz and Hinton, decisions must be

14

based on expected returns and expected expenses. This can
be difficult with short range decisions since they tend to
deal with day to day operations within the firm.
Intermediate range decisions, on the other hand, are often
issued specifically in regard to the measurement of costs
and returns. Long range decisions usually are made in
response to expectations of the relationship of total cost
to total revenue.

Heinzelmann and Bender (1975) discuss three types of
decision making within integrated broiler firms. Strategic
(long range) decisions on the inputs, outputs, and
facilities of the firm are all considered to be variable.
They are concerned with setting the firm's objectives,
changing those objectives, and the development of policies
for the acquisition, use, and disposition of facilities.

Tactical (short range) decisions can change the volume
of production but not the physical size of the plant. These
decisions are concerned with planning and adjusting the
level of output according to seasonal variations in demand.

Operational decisions are suboptimal and concerned with
the day to day operations for sustaining and coordinating
the work flow for a fixed volume of production. This level
of decision making is primarily concerned with control,
making sure that each function has carried out its mission

successfully.

15

Heinzelmann and Bender introduce the computer into
decision making. They say that the computer will induce
rationalization and quantification of the decision making
process leading to programming all or portions of the
process. Second, closely related independent decision
processes tend to consolidate into integrated decision
processes. This causes the boundaries of decisions to
become broader, reversing the organizational concept of the
division of labor. Third, broadening the scope of a
decision tends to push the decision to higher levels of
management. This upward push in decision making creates new
activities, particularly in the middle management level,
expanding the scope and comprehension of middle management
jobs. Finally, when computers induce integration of
decision processes, but decision points remain unchanged,
decision making becomes group oriented. That is, the
overlapping effect causes the need for increased
coordination between managers.

Brady (1967) did a study to determine whether or not
the use of computers has changed the manner, form, or
content of top level management decision making. He
concludes that the computer has not had much impact on the
procedure of decision making, itself. Computer usage,

however, has resulted in increased time to make decisions,

16

and more alternatives to consider. Because of computer
usage, decision makers can now make some decisions at an
earlier date, gain time in whiCh to consider some decisions,
consider more thorough analyses of some situations, review
several courses of action before deciding, examine analyses
of the impact that recommended courses of action will have
on the problem, and obtain additional detailed information.
The computer has not changed the decision making process
itself, but is has taken on some of the work.

In a paper on planning for commercial egg production,
Sheppard and Ridlen (1977) list some typical management
decisions that must be made in planning a commercial egg
producing firm. First the firm must decide whether or not
it should.go into the egg producing business. If the firm
does decide to do so, it must then decide on where
production should take place. Then the firm must decide on
the type and size of house and equipment to buy. The next
decision should concern the strain of pullets to use and
whether to buy them ready to lay or at day old. The kind of
feed to use and whether to buy it whole or mix it at the
farm also must be decided upon. How and where to market the
eggs is another important question which must be answered.
The poultryman must also decide upon a vaccination schedule.
Another important question which is often overlooked in

planning for commercial egg production, is the method of

17

waste disposal.

All of the authors cited seem to agree that the
decision making process is a multistep proposition. Whereas
the authors may have combined steps together, in some cases,
the decision making process encompasses problem realization,
problem identification, alternative solution formulation,
alternative solution evaluation, decision making
(alternative solution selection), action taking (solution
implementation), and solution evaluation. Several of the
authors take decision making a further step by categorizing
the type of decisions whiCh must be made within the firm as
either long range (strategic), which affect the firm for an
extended period of time and, if made, are very difficult to
change, without adversely affecting the firm; short to
medium range (tactical), which affect the firm for a period
of from several days to several production cycles; and very
short range (operational), which must be made on a daily

basis.

2.2 Information Systems

 

A management information system provides information for
management decision making (Mason, 1975). If the quality of
the information provided is poor, the decision will be poor

also. This is true to such an extent that improving the

18

quality of decisions within a firm generally comes as a
result of increasing the efficiency of flows of data.

Mason talks of two approaches to studying management
information systems. The first is to study and refine
existing data flows. The second approach analyzes
management decision problems and breaks them down into
essential elements. By doing this, parameters may be set
for each variable which serve to specify information
requests at each stage.

There are five components to the management
information/decision making system. The first component is
the source of activities and objects related to the
business. The second component is data, which is observed
and measured from the source. The drawing of inferences and
predictions from the data collected makes up the next
component. Evaluation of these inferences with regard to
the values of the organization and the choosing of a course
of action makes up the fourth component. The fifth, and
last, component of the management information-decision
making system is the actual taking of a course of action.

Another view of a management information/decision making
system.(Gallagher, 1961) states that external information
added to a manager‘s own ideas and experiences leads to a
plan of action, which leads to a decision, which leads to a

directive for the implementation of the plan. For good

19

management decision making, the flow of external information
must be accurate, adequate,and swift. Often, businesses are
too complex for these ideal conditions of information flow
to exist. A firm, therefore, should work to minimize the
barriers to information flows such that the ultimate goal of
an effective management information system can be to keep
all levels of management completely informed on all
developments in the business which affect them.

(Because of three basic processes, if the information
flow within a firm improves, the management decision making
process will also improve. The first process by which
management decision processes improve is due to the increase
in quantity and quality of information pertinent to the
decision. Secondly, decision making will also be based on
the evaluation of a wider range of alternatives and of
current factual data, rather than of intuition and
extrapolation of historical data. Last, the impact of a
decision in one functional area on other functional elements
of a business will be more easily measured and a more
comprehensive view of the business can be taken.

According to Gallagher, the computer can be a very
useful tool in aiding the flow of information within the
firm. This usefulness comes chiefly through the orderly and
swift preparation of information for managerial planning and

control. When a firm becomes so complex that it is

20

continually faced with extremely varied problems which
require large amounts of information, a computer may be
installed to prepare reports and solve problems.

Heinzelmann and Bender (1975) state that adapting the
computer to perform the same tasks as previously had been
accomplished by manual means will have little effect on
decision making, except to improve the accuracy and
timeliness of information. However, when the patterns of
information flow are redefined.and.the decision processes
are integrated, the capabilities of the computer can be
exploited and further organizational changes induced
(redefining information flows, itself, is an organizational
change).

Crampon and SChweizer (1961) looked at the informational
needs and problems of small businessmen. They concluded
that, overall, small business use of management information
is generally inadequate. There is inadequate use of the
information available, small businessmen have inadequate
knowlege of their own problems, there is inadequate knowlege
of the existence of information which might assist in the
solution of problems, and there is an inadequate
understanding of the potential value and place of
information in the total business picture.

Crampon and Schweizer concluded that it appears that if

small businessmen are to be helped to any major extent, in

21

regards to management information, they must first be
convinced of the existence of a prdblem, second they must be
convinced that assistance is available, and third they must
be taught to make proper use of the information itself.

Riemenschneider (1978) says that in agriculture,
information systems are designed to help decision makers
make decisions to solve problems that arise at the farm,
farm industry, or at the national economy level. He
suggests that any theory of information should focus on
problem solving. In problem solving, the information
gathered is the result of some basic process of inquiry.
There are three steps to this data collection. The first is
conceptualization of information, the second is
operationalization of the concept, and the third is actual
measurement.

In farm management, collection and analysis of farm
records are essential preliminaries to an appraisal of
technical and managerial efficiency (Clayton, 1967). This
appraisal is preliminary to remedying deficiencies prior to
farm planning; iRecords and analysis are again.required to
assess the effects upon farm income of any adjustments made.

Bentz and Hinton (1964) also talk of the uses of farm
records. They say that records such as daily mortality,
daily production, daily feed intake, daily water consumption

and daily temperature variation are all examples of records

22

that poultrymen should use. They say that most records of
this type aid in intermediate range decision making. These
records are the diagnostic tools of management, and are used
to evaluateloverall.business success, trace the sources of
the strengths or weaknesses of the firm, and guide day to
day operations of the business.

Purcell (1969) developed a conceptual basis for
examining the effectiveness of information patterns in the
beef marketing system. His interpretation of the
information system for beef marketing is more related to a
communication system. He identifies barriers to effective
communication within.the‘beef marketing system. Purcell
states that any communication system entails a source.
Channel and receiver. The differences between communication
systems lie in the channel of communication.

Purcell says that for effective communication the source
must understand the needs of the receivers, and since needs
change, this understanding must be constantly updated. For
the source to realize that a change is needed, feedback
loops must be present and functioning. The receiver must
have adequate means of returning his reactions to a message
back to the source. Each participant in the communication
system must recognize the importance of the operating
environment as a determinant of role conception and

performance. Habitual action, within the communication

23

system, must be avoided. EaCh party of the communication
process must recognize that symbols, not meanings, are
transferred.

The information needed by problem Solvers for their
decision making tasks should be timely, of good quality
(descriptive and broad enough that decisions can be made,
given its usage), and pertinent to the problem area. If the
problem solver cannot utilize the information which has been
gathered, then the decision maker will have to go in searCh
of additional information, and hope that this additional

information will be of use.

2.3 Computer Usage

 

 

Many of the early uses of computers in agriculture were
of the form of systems simulation models. A systems
simulation has two distinct operations (Dent and Anderson,
1971). First, there must take place the development or
synthesis of a model that adequately represents the system
under study. Second, the simulation allows the examination
of the behavior of the model in reaction to Changes. The
systems simulation has been a viable tool in studying
agricultural systems at many different levels, from a
particular animal to the agricultural subsector as a whole.

ManetsCh (1970) sees simulation as a repetitive problem

solving process involving problem formulation, mathematical

24

modeling, computer implementated solutions of resulting
models, and creative design and execution of simulation
experiments which provide answers to the questions posed.
Output of a simulation is usually a set of plans and/or
management strategies whiCh, in some sense, will result in
good or better system performance.

In deciding whether of not to go ahead with the
construction of a simulation model, several things must be
considered (Manetsch). The first consideration concerns
the expected payoffs from successful implementation of the
model. The second consideration is whether or not it is
possible and/or economically feasible to acquire the
information necessary for model construction. Next, the
possibility of bringing together decision makers,
economists, and systems analysts in a viable team effort
must be considered. The last consideration is whether or
not it is politically or economically feasible to implement
the results of the analysis.

The systems simulation serves as an important tool in
the teaching of farm management (Connor, 1970: Vincent,
1970b). The simulation is essentially an extension of the
case study approaCh to learning, which has long been part of
the educational process. The simulation is of particular
use in helping the student gain experience in suCh areas as

decision making and observing the consequences of

25

alternative decisions. The "gaming" which can be played
through the use of a simulation closely approximates real
world decision making.

Candler (1970) discusses the potential use of computers
as an aid in farm planning. He states that using the
computer to aid with.repetitive real life farm management
decisions is very different from using the computer to solve
one time research problems about the management of farms.

Candler also states that computer programs should be
such that data can be put in the form most convenient to the
farmer and that the results of the program should be
reported in a form whiCh will be the most easily understood
by the farmer and/or his immediate advisors. There are
three reasons for this. First, the farmer must "trust" the
computer to some extent, the more familiar are the numbers
going into the program, the more trust will the farmer have
in the numbers coming out. Next, the machine, once
programmed, is much more efficient at manipulating data than
is the farmer (farm manager). Last, infrequent users of
computer programs are unlikely to be able to enter data in
the right spot, unless they have clearly defined data forms
to use.

Vincent (1970a) outlines some of the assumptions which
had to be made in building a simulation for problem solving

in the poultry industry. He had to assume that the industry

26

structure would be changing such that the actions of those
in a position to exert power (feed manufacturers,
hatcherymen, etc.) would more nearly explain the future
state of the poultry industry than would historical
phenomena, or the plans of those now counted as poultry
producers. He had to assume that even if the total system
could be identified, many important subsystems would have to
be ignored or treated as exogenous in order to select a set
of subsystems which could receive more intensive treatment.
It had to be assumed that the model could never be complete
since it would be subject to modification with improved
information” It was assumed that even if the simulation
could answer questions on how the industry "does" or "might"
behave, the model could still not answer questions of how
the industry "will" or "should“ behave.

Other authors have written about computer usage in
agriculture. Candler et a1. (1970) write that the use of
computers in agriculture has been limited because computer
programs that are almost ideal for the solution of research
problems are almost totally useless to extension workers
attempting to help farmers solve similar problems on a day
to day basis. The major reason for the difference in
software requirements between research and extension is the
difference in types of questions asked. To adequately solve

extension problems, software must have the characteristics

27

of clarity, speed and reliability.

Erickson et a1. (1971) say that the high cost, in money
and time, of computer service had been the main reason for
the comparatively minimal use of the computer as a
management tool in farm business planning. The authors
developed a single period linear programming model and
sequential cash flow projection program for farm decision
making. The major limitations of the program were the
problem of incorporating sufficient detail and individuality
into eaCh farm business model.

Harsh (1970) used a computer/ touch tone telephone/
audio response data concentration unit system for farm level
problem solving. The touch tone phone was used as a remote
input/output terminal. The low cost of the touch tone
telephone made it a greater asset for field operation than
did its liability as a limited input/output device.

There were several reasons for using a remotely accessed
computer rather than making the farmer send in his data
through the mail. First, this system was expedient,
Second, farmers had to supply all critical information;
information could not be discounted because it was time
consuming or difficult to obtain. Third, since the farmer
had to input data and received the results immediatelyy'he
felt "Closer“ to the analysis and (fourth) had more

confidence in the results. Fifth, by using computer models

28

the farmer was able to undertake complex or time consuming
analyses. Last, the computer was reliable; errors were
reduced.

Harsh also listed several disadvantages. First,
software design is expensive. The types of problems on
which a computer analysis can be obtained are limited to
those problems whiCh are repeatedly faced by large numbers
of farmers. Second, it is difficult to define problems and
design a model such that farmers can understand and supply
data, and interpret the results. Third, the farmer is faced
with the problem of identifying errors.

Huffman and Carville (1965) write of a computer program
designed to assist farmers in keeping accurate and useful
records in the management of the farm business and to
provide accurate and timely farm business information. The
emphasis of the program was on teaching farmers to keep
records which are useful for making management decisions and
teaching them.tx> use records in evaluating their farm
business.

In a paper on alternative systems for trading shell
eggs, Schrader et al. (1968) developed a computerized egg
trading system and evaluated its feasibility as an
alternative to the then present egg trading and pricing
methods. The computerized egg trading system was designed

to provide for centralized ownership transfer while the

29

actual physical movement of eggs was direct from the seller
to the buyer by the lowest cost means. The major advantage
to this system was the potential for expanded exposure given
to bids and offers.

Holder (1970) looked at the feasibility of a
computerized forward contract market for slaughter hogs.
The study had three objectives, first to identify the market
coordination problems of hog producers and packers; second,
to design a computerized forward contract market capable of
alleviating the coordination problems identified; and third,
to evaluate the economic feasibility of such a market by
comparing it with the alternatives currently in use. The
computerized forward contract system used a computer link
similar to that described by Schrader et a1. (1968).

Dale (1974) described a computerized prediction model
for egg production management decisions. The model was
developed to test the hypothesis that egg production, egg
size, and mortality could be predicted, and, if the
hypothesis was true, if the prediction equations could be
incorporated into a dynamic simulation model to aid farm
managers in their flock replacement decisions. The
simulation model developed performed very satisfactorily.
Dale states that like any other forecasting and planning
tool, the results obtained, compared to actual results, were

only as good as the input data.

30

Jacobs (1978) developed a computer simulation model to
project future receipts and expenses for egg production
complexes. The model was designed to be used as a tool in
the decision making process and was built to be used when
changes in variables dictated” The model was designed to be
used for making projections with respect to egg production
parameters.

Rahn (1978) writes of a capital expenditure analysis
program which can be used to look at the financial
attractiveness of an investment. By varying equity
financing percentages, interest rates, depreciation
schedules, and income tax rates, a potential investor can
use the program to see whether or not an investment is
attractive, or under which combination of variables the
project makes the most sense.

From the private sector, several companies have tried
to provide computerized flock management programs to poultry
producers. All three systems mentioned here have relied on
incoming data from client firms, have run the data on main
frame computers, and then have returned the output to the
client firms. Agrimetrics Associates (Anonymous, 1981a) has
15 years of experience in measuring the "efficiency" of the
poultry industry. They have done this through improving
management information systems so that firms can monitor day

to day operations.

31

In 1975, Chilsohfs Management Controls, Inc. (Anonymous,
1982a) began a service to run flock management records,
provided by clients, on an in-house computer. The output
generated provided producers with flock, company, and
national comparisons. The national comparisons were based
on the data of all of Chilson's clients.

Recent rapid advancement in technology has opened up
small businesses to the use of computers. Five years ago
the microcomputer industry did not exist. Now there is an
installed base of over one million of these personal
computers, and the forecast projects a growth rate of as
muCh as 50 percent per year for the next decade (Ditlea and
Tangorra, 1982). Sales of software for these small
computers totaled about 500 million dollars in 1981 and is
expected to range between one and five billion dollars per
year by 1985 (Ditlea and Tangorra, 1982) and could increase
to as much as 20 billion dollars per year by 1990 (Alsop,
1982). -

Hughes (1981) mentions a study which indicates that as
high as 64 percent of beef producers interviewed were
planning on buying a microcomputer within the next five
years, and 27 percent said they will purchase a computer in
one to two years.

Beef producers ranked business record keeping as the

number one management function which they wanted the

32

microcomputer to perform. Hughes mentions a study from
Alberta, Canada of beef producers owning microcomputers
which stated that the main uses for microcomputers were farm
planning, financial record keeping, physical record keeping,
and analysis of farm records.

Hughes lists six steps the prospective purchaser should
take in buying a microcomputer. First, study management
information needs. Collection and analysis of management
information requires time and money and the buyer cannot
afford to collect management information that.he does not
use or need. Second, the purchaser needs to identify
available software that might meet his management
information needs. Third, the purchaser needs to determine
the hardware specifications required to execute the needed
software. Next, local hardware dealers should be contacted
who can make the purchaser aware of the viable hardware
alternatives. Fifth, estimate the cost/benefit ratio of the
proposed computerized management information system. Last,
make the decision to set up or not to set up the
computerized management information system.

Andre (1981) says that in the near future cattlemen are
likely to consider their microcomputer as the most valuable
production tool they own because of the help provided in
making management decisions vital to the success of the

agricultural enterprise. The microcomputer can do nothing

33

that cannot be done with a hand held calculator, but it can
do it faster. Even with this, says Andre, time savings is
not the big advantage .in having a microcomputer, the
advantage comes in the reports generated that will tell
exactly the state of the firm and help the firm make a
decision.

Andre says that the largest problem with microcomputer
use is in the area of software development. Good software
development with extensive data bases is extremely
expensive. In software development, the priority should be
on a program that an inexperienced person can run, and on a
program that is written in sudh a way so as not to be
confusing.

Hinman and Willet (1981) say that the feature of
microcomputers whiCh will most strongly attract farmers is
the ability to store and process farm records. Farmers have
a high appreciation for the role of records in improving
control over their businesses. The authors feel that the
most intensive operations will find that the greatest
benefit from using computers will be to analyse day-to-day
problems.

Hinman and Willet list three things at which the farmer
must look prior to making the computer purchasing decision.
First, the farmer needs to decide what he wants the computer

to accomplish for him. Second, he needs to look at the

34

availability of software which is useable to him. Third,
the farmer needs to look at the availability and usefulness
of microcomputer hardware.

Processing of dairy herd records on the computer over
the last 20 years has resulted in a wealth of information to
help with.herd:management, breeding, and nutrition (Bath,
1980). Programs utilized for more efficient feed
formulation are the most recent programs to be developed for
dairy farm usage. When.properly used, these programs can
result in significant increases in income above feed costs
from the dairy herd.

Smith (1980) says that dairy records have been
computerized for about 25 years. Because of the increasing
accessibility to computers by individual dairy farmers,
computers will play’a greater role in the decision making
process. Smith says that increased attention is being given
to computerized dairy management because new technology has
provided necessary instrumentation, the cost of computer
usage is declining at the same time that herd size is
rising, the computer can serve to extend the memory of the
manager, and that computer usage can be extended to farm
financial accounting.

In an article on on-farm computer usage (Anonymous,
1981b), Wisconsin dairy farmers tell that they incorporated

a microcomputer into their operation to help make themselves

35

more sophisticated financial and herd managers. Their uses
for the microcomputer are many and include: general ledger
accounting, gross income and expense statements, enterprise
accounting, depreciation schedule maintenance, inventory of
current assets, budgeting, balance sheet, herd health
records, production information, and as an aid in making
financial decisions. These dairy farmers believe that the
greatest advantages of having the operation's accounting
system computerized are the savings of time and that the
accounts are presented in a neat, detailed fashion. In
making decisions, with the aid of the computer, the farmers
feel that the biggest help comes from the speed with whiCh
the computer runs. If you are not satisfied with the
results of the output of a decision making program you can
quickly rerun the program with new data and "fine tune" the

decision.

Chapter 3

The Integrated Shell Egg_ProducingFirm, Firm Decision
Making, and Computers and Software Design

 

 

This section deals with the definition and
identification of the entities whiCh will be integrated in
the discussion chapter of this dissertation. The first part
of this chapter defines the different parts of the
integrated egg production firm and identifies the decision
makers at each level of the firm. The second section looks
at the decision making/problem solving process and
identifies the types of decisions which must be made at each
level of the firm. In the last section of this chapter, a
look is taken at areas in which the computer can assist in
the decision making process, and at the types and design of

software.

3.1 Ag Integrated Shell Egg Producing Firm

 

 

An integrated egg producing firm consists of
administration, . financial operations, hatchery operations,
feed production, egg production, and egg
processing/marketing (Figure 1). Each of these units can be
broken down into subunits based on the functions performed.
For example, the hatChery operation can be broken down into

breeder flocks, the pullet rearing operation, and into the

37

Figure 1. Firm Structure of an Integrated Shell Egg
Producing Firm. -

 

 

   
   

Financial 0 erationgJ

I Data Processing l

 

 

 

 

 

Firm Administrationj

[Production I ProcessstarketJ

Breeder Pullet ‘ Layer
Flocks Flocks Flocks
Hatchery

Formulationr lDelivery] I Assemblgl I Sales I
and Store e
lProcessingIlDeliveryl

 

 
 
   

   

 

 

 

 

 

 

 

 

 

38

hatchery operation itself. The number of functional
subunits will be dependant on the needs, size, and plans of
the firm. For example, if the firm has access to a ready
supply of hatching eggs and/or if the firm is relatively
small, the breeder flock subunit may be done away with.
Since each unit of the integrated egg production firm
has a unique function, each unit can be discussed
separately. Because the decision makers are an integral
part of each of the units of the firm, they will also be

identified at this time.

3.1.1 Firm Administration

 

Firm administration consists of the upper level of firm
decision makers and their direct support people. The
general manager of the firm is at the head of this unit.
Decisions made in this unit generally affect the functioning
of the firm for an extended period of time. The primary
function of this level is the general administration of the
firm. This includes overseeing and coordinating the
functions of each of the various units from which the firm

is formed.

3.1.2 Financial Operations

 

The financial operations unit of the firm is concerned
with the actual flows of revenues in and out of the firm.

Subunits contained within financial operations include

39

taccounting, data processing, and purchasing. Eadh of these
subunits may have its own manager. EaCh of these managers
will work Closely with the other two in order to keep track
of the firmds financial and operating numbers. Each section
of the financial operations unit of the firm must work
closely with all other units of the firm for the smooth,

unobstructed transfer of information.

3.1.3 Hatchery Operations

 

Hatchery operations are made up of three basic subunits.
These subunits consist of breeder flocks, the hatchery unit,
and pullet rearing. Breeder flocks supply eggs to the
hatching unit for the production.of pullets. The function
of the hatChing unit is to gather, sort, incubate, and hatch
the eggs. Procedures such as sexing, debeaking, dubbing,
and Marek's disease vaccination are part of the hatchery's
duties. Pullet rearing takes the young pullets from the
hatchery to sexual maturity when they are ready to be moved
to egg production units.

Note that except in a very large firm the hatchery
operation (especially along with breeder flocks) will
probably not exist. Generally the firm moves into pullet
growing as a means of reducing its costs, but purchases the

day old chicks.

3.1.4 Feed Production

 

40

The feed production facility has two functions. The
first function of the feed production unit is the
manufacturing offeed and the storage of feedstuffs. The
second function of this unit of the firm is feed delivery.
Because of the large number of different types of flocks
(breeder, pullet, and layer), each requiring a different
type of feed, the feed production facility must work closely
with both the hatchery unit and with the egg production

unit.

3.1.5 fig Production

 

Egg production facilities take care of the produCtion of
eggs which are channeled to the processing facilities. The
egg producing unit of the firm consists of some central unit
headed by the general manager in charge of production, and
the individual production units, consisting of either flocks
or complexes, also headed by managers who oversee

production.

3dn6 Egg_Processigg and Marketing

 

The firm's egg processing and marketing division should
consist of four subunits, each of which is based upon the
function which is performed by that subunit. The four
subunits are egg assembly, egg processing, egg sales, and
egg delivery. The organization of egg assembly and

processing has the potential to vary greatly from firm to

41

firm. In an integrated shell egg producing firm in which
production and processing are located in one large complex,
the assembly function may be very small and will be absorbed
directly into the processing facility.

The egg processing facility puts the shell eggs in some
final form from which the eggs will be consumed. For
general consumption, this final form will probably be sized
and cartoned in some fairly standard package which will
facilitate the movement of the eggs to market, and the final
purchase by the consumer.

The egg sales subunit of the firm is in charge of
locating markets which will purchase the eggs produced by
the firm. This subunit's egg sales will be controlled by
the sales manager. Sales will be done by the firm‘s sales
force.

The subunit in charge of egg delivery must make sure
that the eggs reaCh their final destination promptly and in
good quality. The manager in charge of this area of the
firm must not only oversee the scheduling of deliveries but
also must make sure that trucks are in good mechanical
repair. Another duty of the manager of this area will be
to act upon the complaints and suggestions received from the

customers with which the firm deals.

42

3.2 Decision Making and Problem Solving

 

Several of the authors cited in the Review of Literature
section of this dissertation use the terms decision making
and problem solving almost interchangeably. In actuality,
decision making is a single step in the whole chain of steps
whiCh constitute the problem solving process. This section
of the dissertation sets out to define the problem solving
process and look at the flows of information between each of
the steps of this process. Since there are several
different types of decisions to be made by managers within
different areas of the firm, this section will also
identify those types of decisions and the managers within

the firm who must make each type of decision.

3.2.1 The Decision Making/Problem Solving Process

 

3.2.1.1 Problem Area

 

 

The first step in the problem solving process (Figure 2)
is the problem area, itself. If there is no problem area,
there is no problem to be solved, and the problem solving
process need not be put into motion

The problem area in an integrated poultry firm can cover
a complete spectrum from something as insignificant as a
dripping waterer to the problem of meeting the firmfls demand
for eggs several years in the future. The problem area,
itself, varies by decision maker in the firm, and will be

covered in depth in the next chapter of the dissertation.

43

Figure 2. 'The Decision Making/Problem Solving Process
With Information Flows Between Steps.

I Accept Solution! !Reject Solution

Evaluate Solution_l

 

 

 

 

 

 

 

 

IfDecision Making/Action Takingl i

   
  

 

Evaluate Alternative Solutions

 

Formulate Alternative Solutions

I

Management . _‘Outside A
' - Information

 

 

 

 

 

 

Identify Actual Problem]

 

 

- Realize Presence of Problem_J

e if

I Problem Aregj

 

44

 

 

3.2.1.2 Problem Realization

The problem area may exist, but until the presence of
the problem is realized, nothing can be done in order to
rectify the problem. A flow of information must exist
between the problem area and realization of the presence of
the problem. A flow of information from the store of
management skills of the decision maker allows perception of
the presence of the problem. If the problem is different
from what has been previously seen by the decision maker, a
flow of information will also go back to the store of

management skills, updating what the decision maker had

previously known to be true.

3.2.1.3 Problem Identi ficat ion

 

 

Once the problem solver has realized the presence of the
problem, the actual problem, itself, must be identified.
For example, if a flock manager recognizes the existence of
wet manure (realizes that.a;problem exists), the next step
is to identify the actual problem itself. In this case,
the actual prdblem could be a leaking waterer, too little
ventilation, high in house temperatures causing
overconsumption of water, etc.

Information flows come from the previous step in the
problem solving process, allowing the problem solver to

realize the presence of the problem and to identify the

actual problem itself. The problem solver must rely on a

45

flow of information from his store of management skills to
aid in the identification of the problem. A flow of
information also goes back to his store of management skills

to update the information stored there.

3.2.1.4 Alternative Solution Formulation

 

After the actual problem has been identified, the
problem solver must formulate several alternative solutions
to rectify the problem. In our example set forth in the
previous step, if the problem solver has identified the
problem as a leaking waterer, possible alternative solutions
may be to replace the leaking waterer, replace the entire
watering system for the house, or to do nothing at all.

The problem solver relies on a flow of information from
the previous step in the problem solving process to bring to
him the identity of the problem. Next, in formulating
alternative solutions, the problem solver must rely on flows
of information from the problem solver‘s own store of
management skills, on information from other parts of the
firm, and on information from outside of the firm itself.
The problem solver's degree of reliance upon information
from any one of these sources is dependant on the
problem itself. Some problems may be solved with a total
reliance on the decision maker's store of management skills,

while others may rely very heavily on information from

46
outside of the firm.

3.2.1.5 Alternative Solution Evaluation

 

 

Each of the alternative solutions must be evaluated
before the problem solver can make a decision as to how to
rectify the problem. The first information flow comes from
the previous step in the process, which formulates the
alternative solutions. The next information flows are
inward and bring information in from the outside, and from
the problem solver's store of management skills in order to
evaluate the alternative solutions. If the problem solver
feels that the alternative solutions are inadequate,
reverting to the solution formulation step of the problem
solving process to formulate more alternatives is possible.
The last flow of information will be one which will update

the problem solver's management skills.

3.2.1.6 Decision Making/Action Taking

 

Decision making, itself, is the simple act of picking
the best of the alternative solutions evaluated in the
previous step. The sole information flow comes into the
decision making step from the step which evaluates the
alternatives.” The decision maker in our example concerning
the leaking waterer has to Choose the best possible
alternative of replacing the leaking waterer, replacing the

entire watering system, or doing nothing at all. Once a

47

decision has been made, some form of action must be taken to

instigate the chosen alternative.

3.2.157 Solution Evaluation

 

Once a decision has been made and some form of action
taken, the problem solver must evaluate the effectiveness of
the solution in solving the problem. Flows of information
in this step of the problem solving process consist of a
flow of information from the decision making/action taking
step and a flow from the store of management skills. The
flow of information from the store of management skills
would be made up of information with which the problem
solver could compare the results of his action. If the
results of the action taken compares favorably with the
expected, then the decision maker will accept the solution.
If there is no favorable comparison with the expected, then
the problem solver will have to move backward through the
problem solving process to a point where the reevaluation of
the alternative solutions or even the formulation of new
ones will take place.§ For example, if our problem solver
decides to replace the leaking waterer only to have problems
with other individual waterers occur within a short period
of time, his best course of action may be to reevaluate the
alternatives and decide upon complete replacement of the
watering system. A flow of information outward to update

the store of management skills will occur regardless of

48

whether or not the problem solver accepts or rejects the

solution.

3.2.2 Decision Making

 

 

Decisions are categorized as either short, intermediate,
or long range. Short range decisions, also known as
operational or technical decisions are concerned with making
sure that every day actions within the firm flow without
disruption. In an integrated poultry firm, general flock
management decisions fall within this category.

Intermediate range, or tactical, decisions affect the
workings of the system for a longer period of time than do
the operational decisions. Tactical decisions can affect
the firm for up to two or three flock production cycles
(Bentz and Hinton, 1964). Decisions such as the length of
time to keep a flock in production, or whether or not to
molt a particular flock, or which strain of laying hens to
purchase and use are all tactical decisions.

Long range decisions are also called strategic
decisions. Strategic decisions affect the long term picture
of the firm. These decisions are usually made only once in'
connection with a given problem, and once made are not
easily Changed without adversely affecting the firm, in some
way. Strategic decisions could include such things as those

concerning the size of a poultry house, whether or not to

49

move vertically into pullet hatching or feed manufacture, or
whether or not the firm should abandon egg production and
move into swine.

Both strategic and tactical decisions are often
financial in nature and are concerned with the financial
well being of the firm over an extended period of time.
These decisions are usually made with the idea that they
will either help to maximize the firm's receipts and/or
minimize its costs, thereby maximizing the firmfs net
revenues, or profits.

The three types of decisions can be tied very closely to
the three different levels of management of the firm (Figure
3). Strategic decisions are often made to affect the firm
sometime in the future and are made in the face of a great
deal of uncertainty. Strategic decisions are made by the
upper level of firm managers and affect the firm for an
extended period of time. Decisions dealing with firm
expansion, flock size, and type of production and processing
are all strategic decisions and are made by the upper level

of firm management.

50

Figure 3. Levels of Decision Making.

 

 
  
    
 
     

  

Top
Level

   

Strategic
Decision-Making

 

Middle-Level

Tactical
Decision-Making

 

Low-Level

Operational
Decision—Making

 

 

Source: Mandell, Steven L. COMPUTERS AND DATA PROCESSING:

 

Concepts and Applications. West Publishing Co.
St. Paul, Minn., 1979, p377.

 

51

Tactical decisions emphasize the activities required to
implement the strategies that have been determined at the
top level of management. These decisions are made by middle
level managers. Since middle level managers are responsible
for coordinating the production of all areas of the firm
they must be aware of the master plan put forth by the upper
level managers, as well as each other's needs.

Operational decisions are made by the lowest level of
managers (flock supervisors, processing line foremen,
hatching facility foremen) and are made to insure that
specific jobs are done. The characteristic differences in
the different levels of decision making are set forth in
Table 1. These differences in decision making, when applied
to the levels of management of the firm make the information

needs of the managers more apparent.

3.3 Computers and Software Design

 

Small computers can be used in the management of an
integrated shell egg producing firm as an aid in gathering
and processing information whiCh can be used by the problem
solver in decision making. The types of information
manipulated by the computer are dependent on the type of
decisions which the manager must make. Information about
trends in pricing for eggs may be important to one decision

maker in the firm, but not to another. Since there are

52

different levels of managers in the firm making different
types of decisions, the 'use of the computer in information

generation will differ based on the type of manager.

Table 1. Characteristic Differences in Levels of

 

 

 

Decision-Making.
Levels gf_Decision—Mak£ng

Characteristics OperEEIEHEl Tactical Strategic
Time Horizon Daily Weekly/Monthly Yearly
Degree of Structure High Moderate Low
Use of External Low Moderate Very High
Information
Use of Internal Very High High Moderate/Low
Information
Degree of Judgment Low Moderate Very High
Information on Line Very High High Moderate
Level of Complexity Low Moderate very High
Information in High High High

Real-Time

 

Source: Mandell, Steven.lu COMPUTERS AND DATA
PROCESSING: Concepts and épplications. West
Publishing Co. St. Paul M1nn., 1979,p379.

 

 

 

53

In the past, the computer has been used by the
integrated shell egg producing firm chiefly as a manipulator
and storer of financial, accounting, and inventory data.
The tasks associated with the firm's accounting and finance
areas, and with its areas which must monitor inventories,
are tedious and repetitive. The repetition and tedium of
these tasks have made the use of the computer readily
accepted by the personnel within these areas, and the
computer has becomeea valuable tool on which the firm has
come to rely.

Since the adoption of the computer, by the firm, the
computer has been used almost exclusively in accounting and
finance, and in inventory management. The computer has
remained a somewhat mystical entity housed within the
confines of the firmhs data processing section. Use of the
computer has required a great deal of skill, and a number of
sophisticated, expensive computer programs. BecauSe of
these requirements, the use of the computer as a decision
making aid by the firmfs management has been very limited.

Beginning in the mid 1970Hs several companies developed
and began to market small, relatively inexpensive, personal
computers. These small computers were originally meant for
hobby and home use. In a relatively short period of time
these computers developed in power and capability and their

value was discovered by the business community. As

54

computers have developed, so has the software applications
for which they might be used (Table 2 and Table 3). These
small computers now can be used as a.tool in the decision
making processes in nearly all of the areas of the firm.
For a listing of several of the small computer systems whiCh

have emerged as industry leaders, see Table 4.

There are three‘broad categories into which the types
of software which will be used with the small computer can
be classified. There is operating systems and systems
utilities software, there is widely functional software, and
there is applications software which serves a specific
function. The following sections of the dissertation will
look at each category separately, and at some examples of

the programs which belong in each category.

3.3.1 gperating System and System Utilities Software

 

This type of software is used to direct the action or
operation of the small computer in order to make the
computer operate more efficiently. Increased efficiency in
computer operation tends to make the users of the small
computer appreciate and increase its role in the management

scheme.

55

 

 

 

 

Table 2. Application Software Evolution
Software—EVC1ution
Hardware 1975 1980 1985
Small Accounting Accounting Accounting
Business Vertical Vertical Vertical
Computers Applications Applications Applications
Word Processing Word Processing
Teleprocessing
Personal Hobby Accounting Financial
Desktop Software WCrd Processing planning
Computers development Financial Word Processing
Entertainment planning Data Storage
Data Storage Teleprocessing
Education Accounting
Entertainment Education
Entertainment
Word Word Processing Word Processing Word Processing
Processor Accounting Accounting
Teleprocessing
Intelligent Teleprocessing Teleprocessing Teleprocessing
Terminal Data Base Local Processing WCrd Processing
inquiries Word Processing Data Processing
Local Processing
Source: ICP Software Business Review. published by

 

International Computer Programs,

Indianapolis, 49260., Autumn 1982 p.7

In.

Inc.

56

Table 3. The Growth in Personal Computers and Personal
Computer Software from 1979 and Projected to 1990.

 

 

Personal P.C.* Software Dollar value
Computers Packages Sold of P.C. Software

Year Installed in U.S. Sold in U.S.
1979 250000 1000000 $200 Million
1981 750000 2150000 $600 Million
1983 2000000 4750000 $950 Million
1985 4500000 10000000 $ 2 Billion
1987 10100000 25300000 $ 5 Billion
1990 33750000 100000000 3 25 Billion

 

* P.C. is the abbreviation used for Personal Computer.

Source: Palmer, Scott D. "PERSONAL COMPUTERS: Net just for
whiz kids anymore", ICP Software Business Review.,
International Computer Programs,Inc., Indianapolis,
In. 46240, Spring, 1982., p.88

 

57

Table 4. Selected Small Business Computers.

 

Mass Storage

 

 

Small Standard Maximum Floppy Hard
Computer Memory Memory Disk Disk
Olivetti M20 128K 512K 320K llMB**
IBM PC 64K 512K 160K none
Apple III 28K 256K 140K 5MB**
Xerox 820 64K 64K 92K none
TRS-80 Model 16 128K 512K 1.25MB 8.4MB**
Zenith z-1oo 128K 728K 640K 5MB**

 

** Mass storage device is hard disk.

Compiled from information in:

BYTE, BYTE Publications, Inc., Peterborough N.H.,
03458. V01 7, No. 11, Nov. 1982.

Radio Shack 1983 Catalog, Number 354 andy
Corporation, Ft. WOrth, Tx., 76102.

 

Heathkit Mail Order Catalog, No. 859, Heath Company,
Benton Harbor, Mi., 49022.

 

58

3.3.1.1 Operating System Software

 

Operating system software directs the computer's
efforts to either store information on, or retrieve
information from, a mass storage device (floppy disk, hard
disk, or cassette tape). The operating system should allow
the small computer's operator to carry out a number of
functions dealing with file information manipulation, and
file maintenance.

In the past, most small computer manufacturers
developed their own operating systems whiCh were sold along
with their computers and were computer specific. Thus an
operating system designed for one brand of computer would
probably not work on another brand.

Because the operating system is essential to storing
and retrieving information, computer programs are generally
written to be compatible with a particular operating system.
This high degree of compatibility between most computer
programs and a particular operating system (and, therefore a
particular computer) have often limited the transferability
of computer programs from one computer to another.

This lack of transferability of computer programs
between operating systems and/or the small computers
manufactured by different companies has led to the emergence

of one operating system as the industry leader. The CP/M

59

(Control Program for Microcomputers) operating system
developed by Digital Research, is the most popular operating
system, both from the standpoint of related applications
software and from the standpoint of compatibility with a
number of small computer systems (Simpson, 1982). This
operating system became the industry leader due to its early
emergence in the market and to its easy adaptability to new

hardware. Several operating systems are listed in Table 5.

3.3.1.2 Utilities Software

 

Utilities software includes that group of computer
programs which is used as a subsystem of the operating
system and which is capable of performing specialized, often
repeated functions such as sorting, merging, and
transferring data (Mandell, 1979L. These programs act to
make the operating system more versatile through the
addition of functions which enhance its useability to the
small computer user.

An example of system utilities software would be a
telecommunications software package. This type of software
allows the firm's computer to communicate with another
computer over the telephone lines. Information can be
transferred and stored, or directly used at the receiving
end of the transmission. Telecommunications software, for
the firm's computer, can greatly increase the amount and

type of outside information which goes into the firm's

60

decision making process. Commodity price information is a
good example of the type of information which can be brought
over the firm's computer when it is outfitted with a
telecommunications software package. Table 6 lists several

telecommunications software packages.

3.3.2 Widely Functional Software

 

Widely functional software is generally purchased from
a vendor and is used for a specific type of job. Software
in this category provides the user with the ability to make
use of the small computer without having to develop software
for a specific function. Functional software greatly
enhances the worth of the small computer by making the
computer easier for non-computer oriented people to work
with. Software which is part of the functional software
category includes data base management software, word

processing software, and computer worksheet software.

3.3.2.1 Database Management Software

 

 

Database management software helps the firm manage the
information which it needs to keep on hand to aid in the
decision making process. A data base can be set up which

will allow the firm's decision makers to store data until it

61

Table 5. Selected Disk Operating System Software. Software
Developer, Availability, and Price Range.

 

 

Program Name Developer and Availability Price Range
CP/M (Control Digital ResearCh, 160 Central $125-150
Program for Ave. Pacific Grove, Ca. 93950.
Microcomputers) And various vendors.

PCOS (Profess- Dacutel/Olivetti Corp. 155 Included with
ional Computer White Plains Rd. Tarrytown Olivetti M20
OperatingSystem)N.Y., 10591 Prsnl Cmptr
HDOS (Heath Disk Heath Company, Benton Harbor $150
Operating System) Mi., 49022.

TRSDOS (Radio Tandy Corporation, Ft. worth Included with
Shack Disk Radio Shack
Operating System) Computers
MS-DOS (Microsoft Microsoft Corporation Included with
Disk Operating 10700 Northrup way IBM Personal
System) Bellevue, We. 98004 Computer

 

Compiled from information in:

BYTE, BYTE Publishing, Inc., Peterborough, N.H.,
03458, V01 7, No. 11, Nov., 1982.

Radio Shack 1983 Catalog, Number 354. Tandy
Corporation Ft. WCrth, Tx., 76102.

 

Heathkit Mail Order Catalog, No. 859, Heath Company,
Benton Harbor, Mi., 49022.

 

Mini Micro Systems, Cehners Publishing Company,
Boston.,Vo1. XV, No. 6, June, 1982, p.311.

 

62

Table 6. Selected Telecommunications Software, Software
Developer, Availability, and Approximate Price.

 

Program Name Developer and Availability Approx. Price

 

TERM II Supersoft, P.O. Box 1628 $170
Champaign, Il. 61820 and
various vendors.

SuperTerminal Instant Software, Peterborough, $ 95
N.H., 03485, and various vendors.

LogOn Ferox Microsystems, Inc. $150
Arlington, Va.

 

Compiled from information in:

Farm Computer Software handout presented by
Dr. Sherrill Nott, Agric. Econ. Dept., M.S.U.,
Farmer's Week, 1982.

 

ICP Software Business Review, International Computer
Programs, Inc., Indianapolis, In. 49260, Autumn, 1982.

 

BYTE, BYTE Publications, Inc., Peterborough, N.H., 03458,
V61 7, No.11, Nov., 1982.

63

is needed and then manipulate it in such a way that it can
be used. Database management software generally organizes
the data that is input into a number of records (Peterson
and Brook, 1982). Each record is a set of data items
related to a particular thingy place, or time. Because of
the way each record is set up, the user has the capability
of sorting on a particular item, adding, averaging, and
generally manipulating the date such that it might be useful
in the decision making process.

Flock production records, processing plant data, and
other historical records are examples of the types of date
which can be kept and manipulated by a data base management
system. The capablility of sorting and analyzing records is
the major attraction of data base software and can make the
computer a useful tool to even small firms who wish to
purChase a computer system. Data Base Management Systems
are listed in Table 7.

3.3.2.2 Word Processing Software

 

Word processing software can help the firm generate
letters and reports. Attractiveness of word processing
software comes chiefly from the ease with which written
material can be generated, manipulated, corrected, and
copied. Word processing software acts chiefly as a labor
saving aid for the secretarial personnel. Selected Word

Processing Software packages are listed in Table 8.

64

Table 7. Selected Data Base Management Software, Software
Developer, Availability, and Price Range.

 

Program Name Developer and Availability Price Range

 

dBASE II Ashton-Tate, 9929 Jefferson $429-700
Los Angeles, Ca. 90230, and
various vendors.

Condor Condor Computer Corp. Ann Arbor $79S-899
and various vendors.

Profile IIIplus Tandy Corporation, Ft. WOrth, $199-300
Tx., 76102; Radio Shack Stores.
and various vendors.

DeteStar MicroPro, 33 San Pablo Ave. $225
San Rafael, Ca. 94903, and
various vendors.

FMSBO DJR Associates, 303 S. Broadway $595-995
Tarrytown N.Y., 10591, and
various vendors.

 

Compiled from information in:

Farm Copputer Software, handout presented by
Dr. Sherrill Nott, Agric. Econ. Dept. M.S.U.,
Farmer's week, 1982.

 

 

BYTE, BYTE Publications, Inc., Peterborough, N.H.,
03458, V61. 7, No. 11, Nov., 1982.

Info WCrld, Popular Computing, Inc., Framington, Me.,
01701, V61. 4, Number 41, Oct. 18, 1982.

 

65

3.3.2.3 Computer Worksheet Software

 

 

Computer worksheet software allows the user to set up
tables and reports, do simple calculations, and manipulate
rows and columns of data. In general, software of this type
allows the small computer user to carry out complicated
tasks without having to go to the effort and expense of
designing complicated software.

In addition to being versatile in its application,
Computer WOrksheet Software is relatively easy to learn to
use. These two features have made computer worksheet
software very important in the growth of the small computer
industry. As small computer manufacturers have switched the
target market of their product from home/hobby use to small
business applications, the existence of computer worksheet
software has given businessmen the opportunity to purchase a
small computer and begin using it immediately. Table 9

lists several popular Computer Worksheet Software packages.

 

3535; Applications Software

The specific applications software whiCh will be used
in any given problem situation will depend on the questions
which must be answered. Software which answers questions
concerning the current state of a situation is descriptive
software. Descriptive software includes financial
accounting software which tells the problem solver of the

current state of the firm, intra-firm monitoring software

66

Table 8. Selected Word Processing Software, Software
Developer,Avai1abi1ity, and Price Range.

 

 

Program Name Developer and Availability Price Range
W6rdstar MicroPro, 33 San Pablo Ave. $289-450
San Rafael, Ca., 94903 and
various vendors.
Scripsit Tandy Corporation, Ft. Worth $399
Tx., 76102; Radio Shack Stores.
Easywriter Information Unlimited Software, $250

Apple Writer

Inc.,281 Arlington Ave.,
Berkely, Ca., 94707.

Apple Computer, Inc., 10260 $ 75
Bandley, Cupertino, Ca., 95014.

 

Compiled from information in:

Farm Computer Software, Handout presented by

 

Dr._§herrill Nott, Agric. Econ. Dept. M.S.U.,
Farmer's Week, 1982.

BYTE, BYTE Publications, Inc., Peterborough, N.H.,
03458, V61. 7, N6. 11, N6v., 1982.

Info W6rld,

Popular Computing Inc. Framington, Ma.,

01701,V61. 4, Number 41, Oct. 18, 1982.

Radio Shack 1983 Catalog, Number 354, Tandy

Corporation,

Ft. Worth, Tx. 76102.

67

Table 9. Selected Computer W6rksheet Software, Software
DevelOper, Availability, and Price Range.

 

Program Name Developer and Availability Price Range

 

VisiCalc VisiCorp. 2895 Zanker Rd. 5159-190
San Jose, Ca., 95134, and
various vendors.

Super Calc Sorcim, P.O. Box 32505 $199-295
San Jose, Ca., 95152, and
various vendors.

Calc Star MicroPro, 33 San Pablo Ave. $185-296
San Rafael, Ca., 94903, and
various vendors.

T/Maker II Lifeboat Assoc. 1651 Third Ave. $209-275
New York, 10028, and various
vendors.

ScratchPad SuperSoft, P.O. Box 1628 $295
Champaign, 11., 61820.

 

Compiled from information in:

Farm Computer Software, Handout presented by
Dr. Sherrill Nott, Agric. Econ. Dept. M.S.U.,
Farmer's Week, 1982.

 

BYTE, BYTE Publications, Inc., Peterborough, N.H.,
03458, V61. 7, No. 11, N6v., 1982.

Info world, Popular Computing, Inc., Framington, Ma.,
01701, V61. 4, Number 41, Oct. 18, 1982.

 

68

whiCh tells of current feed and water consumption or current
housing and environmental conditions, sales analysis
software which can relate current sales by product or by
customer, and inventory control software which allows the
problem solver to note and make decisions based on the state
of the inventory in question.

Software which is diagnostic in nature tells the
prOblem solver what is wrong with a given situation. This
type of software often has to compare the current state of a
situation with the normal state, or with a standard of some
sort. Diagnostic software includes software which stores
flock records and allows the comparing of current production
with that which is normally expected, or with some
production standard.

Another area in which software is useful to decision
making, within the firm, is in prediction. Predictive
applications software can be used to answer "what if"
questions. Simulations and projections are examples of
predictive software. The use of predictive software within
the firm has a wide range, including predicting daily feed
intakes or egg production, and predicting market prices or
future sales.

Prescriptive applications software helps the decision
maker to find an actual solution to a problem. Software

serving this function is often designed to allow the

69

decision maker to arrive at the optimum solution to a
problem which has a number of possible alternative
solutions. Least cost feed formulation or least cost truck
routing programs are examples of software which allow the
decision maker to arrive at an optimum solution to a problem
which has a number of viable alternatives.

Applications software is specifically designed to carry
out a single function for the small computer user. In many
cases, in areas in which the task to be accomplished is
widespread from firm to firm, applications software may be
available from a vendor. In tasks specific to the user
firm, applications software will have to be designed by the
firm, or by someone hired for that purpose.

The specificity of applications software is its main
strength as well as it main weakness. The strength of
applications software lies in the fact that it isldesigned
to do a specific task. Generally, applications software
should be able to do this task relatively efficiently
because of its specific nature. Since the software is being
designed specific to the needs of the user, it can make the
computer a powerful tool in the decision making process of
the firm.

The weakness tied to the specificity of applications
software is derived from the great expense in time and money

by the user firm in developing the software which it needs.

70

If the software proves to be applicable frequently within
the firm, or if it proves to be saleable to other similar
firms, the development costs of the software can be reduced,
on a per use basis, or retrieved through the sale of the
software.

Two types of applications software which are important
to the shell egg producing firm include financial analysis

software, and poultry management software.

3.3.3.1 Financial Analysis Software

 

Financial analysis software is the grouping of computer
programs which is concerned with the dollars and cents of
the firm. The most obvious financial analysis software
which might be useful to the firm is the group of computer
programs specifically designed to aid in the accounting
functions. These programs would include general ledger,
accounts payable and receivable, and payroll. The programs
involved here could also be used to generate the reports
whidh normally are a function of the accounting department
of the firm. In effect, these programs could be used by the
firm as a labor saving device for the personnel of the
financial operations section.

Financial analysis programs which could be used more
directly in the decision making process of the firm would

include cash flow projections, company sales projections,

71

and industry growth projections. Least cost truck routing
and least cost feed formulation programs are financial
analysis type programs whiCh can potentially help the firm
cut its costs. Financial records from the production level
can aid the firm in deciding whether each flock, processing
line, or salesman is performing up to potential. Other
financial analysis type programs which might be of aid to
the firm in the decision making process might include
capital expenditure analysis programs which help to evaluate
investment attractiveness (Rahn, 1978). Table 10 lists
several Accounting Software packages.for small computers,
and some of the vendors from which they may be obtained.
Table 11 lists several Financial Analysis Software packages

which might be useful to shell egg producers.

3.3.3.2 Poultrg Management Software

 

Poultry management software allows the managers within
the firm to use the computer effectively'to keep track of
those factors whiCh indicate the performance of the flocks
within their charge. This software can be designed to
compare current flock management figures with past flock
performance figures or with those of some expected standard.
Other poultry management software which can be of help to
flock managers include production projection software, flock
simulation software, and flock scheduling software. All of

these software types can be used to aid in the effective

72

management of the firmfs flocks. Examples of P6u1try

Management Software are listed in Table 12.

73

Table 10. Selected Accounting Programs for Small Computers
and vendors from Which They May Be Obtained.

 

 

General Accounts Accounts
Vendor Ledger Payable Receivable Inv Payroll
PeaChtree Yes Yes Yes* Yes Yes

3445 Peachtree
Atlanta, Ga.
30326

Chilsons Mgt. Yes Yes Yes Yes Yes
Controls.

Rancho Cucamonga,

Ca., 91730

Radio Shack Yes Yes Yes Yes Yes
Tandy Corp.

Ft. W6rth

Tx., 76102

Heath/Zenith Yes** Yes Yes* Yes Yes
Heath Co.

Benton Harbor

Mi.. 49022

TCS Acctg. Yes Yes Yes Yes Yes
Texas Cmptr

Systems.

Arlington

Tx.. 76004

 

*Sales invoicing is a separate program from accounts
receivable.

** Accounting software sold by Heath/Zenith is actually by
Peachtree Software, Inc. and requires the purchaser to sign
a software sublicensing contract with the dealer.

Compiled from information in:

ICP Interface: Administration and Accounting.,
International Computer Programs, Inc., Indianapolis, In.,
46240, Vol. 7, N6. 3, Autumn, 1982.

 

 

Radio Shack TRS-80 Computeg Catalo , No. RSC-4, Tandy
Corporati6n, Ft. W6rth, Tx. 76102, 1981.

Heath/Zenith Computer Systems Mail Order Catalog 800,
Heath Company, Benton Harbor, Mi. 49022, 1982.

 

74

 

 

Table 11. Selected Financial Management Software for Small
Computers WhiCh May Be Useful to Egg Producers.
Pfogram ‘Program Program Available
Name Function Language From
FloCk Used'ih sdhedulihg Fortran Allan Rahn
Budgeting flock placements to Animal Sci.
Model maximize net receipts Dept. M.S.U.
per thousand hens. East Lansing
Firm/Flock Used in estimating Fortran Allan Rahn
Budgeting firm net receipts
Model given the firm's flock
placement schedule.
Cash Calculates discounted Basic Allan Rahn
cash flow, depreciation
schedules, debt payment.
Used in firm investment
decision making. Unlimited
asset categories.
Drain Calculates discounted Basic Allan Rahn
cash flow, debt payment,
depreciation for one asset.
Used in investment decision
making. Buy versus lease.
SClayer Evaluate contractor egg Basic John Welter
laying contracts Poultry Sci.
Dept. Clemson
Univ. Clemson
S.C.. 29631.
SCplayer Evaluate producer egg Basic John Welter
laying contracts
NEhenbud Budgets capital/cash Basic Dan Bigbee
flow for layers Animal Sci.
Dept. Univ.
of Nebraska
Lincoln, Ne.
68583.
NChic Tracks poultry enter- Basic J. D. Dodson
prise cash flow N.C. State
Raleigh,

N.C.! 27650.

 

75

Table 11. Selected Financial Management Software for Small

Computers WhiCh May Be Useful to Egg Producers.
(Continued 1.)

 

 

investment analysis

Program Program Program Available
Name Function Language From
PAeggbud Projects egg produc— Fortran ‘FErest Muir
tion/cost/returns Poultry Sci.
Dept., Penn.
State Univ.
University
Park, Pa.
16802.
MIplan72 Analyse S-year farm Fortran Sherrill Nott
plan/cash flow/profit Agric. Econ.
Dept e I MiCh .
State Univ.
E. Lansing,
Mi. 48824.
MIplan03 Evaluate capital Fortan Sherrill Nott
investment feasibility
VAdecal Evaluates business Fortran Craig Woods
alternatives Extension
Service, VPI
Blacksburg,
Va. 24061.
VAinvest Analyses investment Fortran Craig Woods
net present values
MNCshflo Budgets farm cash Fortran R. Hawkins
flow/credit needs Dept. of Ag.
Econ. U. of
Minnesota
St. Paul, Mn.
55108
-Mvabud For present value Fortran Earl Fuller

Dept. of Ag.
Econ. U. of
Minnesota

76

 

Table 11. Selected Financial Management Software For Small
Computers Which May Be Useful to Egg Producers.

(Continued 2.)

 

 

 

Pfogram Program Program Available
Name Function Language From
SCirr Calculates internal Basic M. Leafgreen
rate of return for Agric. Econ.
annual net cash flows and Rural
Sociology.
Clemson Univ.
Clemson, S.C.
29631.
OKdepn Calculates alternative Basic T. Nelson
depreciation schedules Ag. Econ.
Dept. Okla.
St. Univ.
Stillwater
Ok. 74078
NCproceg Biological/Economic G. Martin
analysis of different Pltry. Sci.
groups of layers Dept., N.C.
State Univ.
Raleigh, N.C.
Sources:

Dr. Allan P. Rahn, Animal Science Department, Midhigan
State University, East Lansing, Mi. 48824.

Strain, J. Robert and Sherry Fieser, Updated Inventory
Food Resource Economics

of Agricultural Computer Programs,

 

 

DEpartment, Cooperative Extension Service Circular 531,
University of Florida, Gainesville, March,

1982.

77

 

 

Table 12. Selected Small Computer Software WhiCh May Be
of Use to Egg Producers.
Pfogram IProgrem Machine Available
Name Function Desgned for From
Eggs Calculates weekly egg Radio Al Tinsley
egg summary, flock Shack I Clemson Univ
financial analysis Clemson, S.C.
Commercial Record keeping/manage- Apple III Agrimetrics
Pullet ment system for commer- P.O. Box 34190
Controller cial pullet flocks Ridhmond, Va.
Commercial Record keeping/mngmt Apple III Agrimetrics
Layer system for commercial
Controller layer flocks
Nest-Run Calculates value of Apple III Agrimetrics
val—U-Calc eggs on nest run basis
Laying Record keeping/mngmt Apple III Agrimetrics
Breeder system for commercial
Controller layer breeder flocks
Least Cost Searches all possible Apple III Agrimetrics
Feed combinations of feed Radio Shck
Formul. ingredients to arrive at Model II
a finished least cost IBM-5120
feed formulation.
C.M.C. Series of menu driven Datapoint Chilsons
Pullet pullet flock management/ Mgt. Cntrls,
System record keeping programs 9645 Arrow
Rancho Cuca-
monga Ca.,
91730
C.M.C. Series of menu driven Datapoint Chilsons
Weekly weekly layer flock Mgt. Cntrls.
Management record keeping/management
System programs
C.M.C. Series of menu driven Datapoint Chilsons
Egg programs for egg grading Mgt. Cntrls.

System

and processing

 

78

 

 

Table 12. Selected Small Computer Software WhiCh May Be
of Use to Egg Producers.
(Continued 1.)
Program Program MaChine Available
Name Function Desgned for From
C.M.CT' *Series of menu driVen ‘Datapoint fiChilsons
Daily programs for daily Mgt. Cntrls.
System recording and updating
of production and inven-
tory figures.
C.M.C. Series of menu driven Datapoint Chilsons
Feed Mill programs which include Mgt. Cntrls.
and Feed report generation and
System least cost feed formu-
lation.
Poultry Series of poultry recrd Rdio Shck Tam 8.
Programs keeping/management Model I Hutchinson
programs. P.O. Box 248
N. Wilkesboro
N.C.. 28659
SCeggs Analyses egg laying Rdio Shck J. Welter
enterprize/costs Models 1. Poultry Sci.
II. III Dept.
Clemson Univ.
Clemson
S.C. 29631
PAchicfd Calculates least Rdio Shck F. Muir
cost poultry feed Model II Poultry Sci.
formulas Penn State
University
Univ.Park,
Pa. 16802
Flock Projections and Digital Computone
Modeling comparisons to stan- Systems
dards for flock prod- One Dunwoody
uction and economic Park, Atlanta
parameters Ga., 30338
Flock Creates daily flock Digital Computone
Record production reports. Systems
Keeping Compares to previous

week, month of prod.
Regional, National Comp.

79

Table 12. Selected Small Computer Software Which May Be
of Use to Egg Producers.
(Continued 2.)

 

 

Program Program Madhine Available
Name Function Desgned for From
HatChery Helps provide compre- Digital Computone
Space hensive management Systems
Management of all aspects of hatchery
operation.
Flock Series of flock mngmnt Hewlett Agri-Data
Summary programs for generating Packard: P.O. Box 625
flock reports and com- IBM 625 Snowhill
parisons Rd., Alamo,
Ca., 30411

 

Compiled from information in:

Chilson's Management Controls, Promotional Literature.
C.M.C., Inc. 9645 Arrow Route, Rancho Cucamonga, Ca.

Agrimetrics Associates, Promotional Literature,
P.O. Box 34190, Richmond, Va. 23234.

 

Survey of Availability of Micro and Mini Computer Software.
J. Robert Stra n. Food and Resource Economics Department,
Institute of Food and Agricultural Sciences,

University of Florida, Gainesville. October, 1980.

Computone Systems, Promotional Literature, One Dunwoody
Park, Atlanta, Georgia, 30338.

Agri-Data, Promotional Literature, P.O. Box 625,
625 Snowhill Rd., Alamo, Georgia, 30411.

Chapter 3

Decision Making and Computer Usage
Within theFirm '

 

 

The last chapter of this dissertation defined and
identified the three separate entities with which the
dissertation deals. These entities consist of the
integrated egg production firm and its decision makers, the
decision making/problem solving process, and computers and
software design. This chapter of the dissertation will take
these three entities and integrate them.

This integration of the three entities will take the
form of a separate look at each manager within each level of
firm decision makers, a discussion of the types of decisions
which each manager must make, the identification of the
flows and types of information which must be used in the
decision making process, and judgement as to the possible
robe of the computer in aiding in decision making and
problem solving.

The appendix at the end of this dissertation takes a
more detailied look at information needs and computer usage
in the egg production subunit of the firm. .An example of
the use of the computer in making a forced molting decision

is used as a clarifier.

81

4.1 General Manager

 

 

The general manager of the firm is responsible for
decisions which guide the long run functioning and operation
of the firm. The decisions made are generally strategic in
nature and are often made to affect the firm sometime in the
future. A decision to locate an egg production complex in
south central Michigan, in 1982, with the expectation that
the comparative advantage for egg production would shift
from the southern U.S. to the Midwest by 1987 is a good
example of a strategic decision whiCh will affect the firm
sometime in the future.

The decisions made by the general manager are often made
in response to information whiCh fosters the belief that a
prdblem will arise in the future. Trends, both economic and
physical, lead the general manager to efforts to take
advantage of a favorable situation, or to decrease the
effects of some adversity. The information flow which
fosters the general manager‘s'belief can either come from
within the firm‘hierarchyu or from outside the firm, as is
the case with economic indicators. As examples, information
from the lower levels of the firmfls management may lead the
general manager to believe that the firm's started pullet
costs are too high, or information from outside the firm
could lead the general manager to expect a dramatic increase

in per capita egg consumption in the near future. Both

82

cases present a problem area in which the general manager
can work.

Once the problem area has been presented to the general
manager, identification of the actual problem must take
place. In the example of high started pullet costs, the
actual problem may be one which can be solved by managers at
a lower level of the firm, or it may indicate the need for
expansion by the firm into the hatching and growing of
pullets. In this case the general manager must correctly
identify the problem before the act of formulating
alternative solutions can begin.

Formulation and evaluation of alternative solutions
draws upon the manager's store of management skills and on
information from extraneous sources. Since the wrong
decision at this level of the firm can often adversely
affect the entire operation, the manager must be especially
careful that the alternative solution which is Chosen is the
correct one. Because of this, outside information becomes
much more important to the decision maker, at this level,
than at lower levels of the firm. The extraneous
information used in the decision making process can come
from lower levels of decision makers within the firm and
will be based on their management skills and on outside
information at their disposal, or based on information which

comes from outside the firm that is available directly to

83

the general manager. By pulling together all of the
information needed to make the decision, the general manager
hopes to choose the correct alternative and facilitate the
long run operation of the firm.

Computer usage at this level of the firm decision will
often be to make information available to the general
manager. Information can be made available to the manager
directly, as is the case with economic outlook statements or
commodity and brokerage house prices, through the use of
telecommunications software. Because of the limited number
of supplies of information the manager has very little
choice as to the type of information received from
telecommunications software. Therefore the use of the
information received may be limited.

The information received through telecommunications
software, through other managers or divisions of the firm,
and through other sources outside the firm may be
manipulated through the use of specific applications
software such that the information might be more useful in
the decision making/problem solving process. The general
manager may use predictive software such as financial
projections, simulations, and other types of applications
software in the decision making process, depending on his
needs. Projections and simulations should take existing

information and relationships, and manipulate them such that

84

the decision maker can receive some idea of what can be
expected from a given situation. With a simulation the
decision maker can conduct a sensitivity analysis by varying
the inputs and noting the outcome of each successive trial
in order to get some idea of the range over which the
outcome will vary in response to the varying inputs. Once
this range has been defined, the decision maker can make
the decision with some degree of certainty that the
alternative solution chosen is the one which is correct. In
this case the computer acts as a prescriptive tool.

The major problem with the adoption of the computer as a
decision making aid, at this level of firm decison making,
is the specificity of software which will be utilized in the
problem solving process. Given a problem solving task in
which the computer might be used, the probability of the
existence of software which can be used directly in the
decision making process is very small. Software design is
expensive, therefore the firm will probably not spend the
money for bringing into existence a piece of software which
it will probably only use one time, and in one situation.
In a case such as this, computer worksheet software can be
especially useful in aiding the small computer user. By
using this type of software in calculating and presenting
data, often the decision maker can get the information

needed to aid in the decision making task.

85

442 Financial Operations

 

 

Since the financial operations unit of the firm was
presented in the methodology section of the dissertation as
being made up of three subunits (accounting, data
processing, and purchasing), the decisions, information
flows and software needs for each subunit should be
presented separately. Since the chief financial officer of
the firm would head this section, this decision maker will
be segreted and treated separately. Note that this
dissertation deals mainly with the use of small computers in
the decision making processes of an integrated shell egg
producing firm: in the case of two areas of the firm dealt
with in this section, accounting and data processing, small
computers may not lend themselves very well to application
due to their small size and lack of power. As the small
computer industry is growing and the technology involved is

advancing, this limitation may not hold true in the future.

4.2.1 Chief Financial Officer

 

 

The chief financial officer is the head of the
financial operations unit of the firm and must oversee the
operation of this unit and guarantee the smooth,
unobstructed flow of financial information from one subunit

to the others. Responsibilities undertaken by this

86

decision maker will include overseeing the accounting
subunit, preparation of financial reports, payroll records,
budget preparation, and the calculation and payment of
taxes. The chief financial officer of the firm will also be
responsible for the allocation of the firm's financial
resources. The Chief financial officer will maintain
banking relationships, manage the firm's cash reserves,
obtain financing, manage pension and insurance plans, and
manage the firmfls relationship with creditors. Large firms
may even allocate the financial information management and
financial resource management duties to two separate
individuals, the controller and the treasurer, respectively
(Brealey and Myers, 1981).

Decisions as to the allocation of the firm's financial
resources will come in response to problems put forth by the
firm's general manager. If the general manager has decided
that the firm must expand its operations, it will be the
responsibility of the chief financial officer to arrange
financing for the project. Information will have to come to
the Chief financial officer from other areas within the
firm, outlining what is needed. This information will be
used along with information from outside the firm to
formulate alternative solutions to the problem of financing
the project. Information from outside the firm may include

interest rates, the availability of money for financing long

87

or short term projects, and the general financial
environment in which the firm must operate. Once the
financial officer has developed the alternative solutions,
the next step will be to contact the financial institutions
involved to arrange for financing.

7 In the other role of the chief financial officer of the
firm, as manager of the firm's financial information, the
actual decision making function is fairly limited. The job
of the officer in this area.is data manipulation such that
the data can be presented in a form to be used in the
decision making process of other areas of the firm.

The computer can be a very important tool to the Chief
financial officer of the firm. The firm's manager of
financial resources can use the computer (in conjunction
with telecommunication software) to gather information on
interest rates, bond yields, stock prices, etc., in an
effort to achieve the best possible financial position for
the firm. Projections and simulations can be used as a tool
in obtaining loans from financial institutions or in
convincing investors to put their monies into the firm.

Software which will be used by the manager, in this
role, will be of two types. The first type is
telecommunications software which will facilitate the
collection of data from sources outside the firm. This data

will more than likely come from services which specialize

88

in this type of data which is needed for firm decision
making. In this case, the telecommunications software acts
as an aid to the decision maker by bringing in information
which can be used in describing the current operating
environment of the firm.

The second type of software which will likely be used
by the financial manager is specific applications software
for making projections and simulations of the financial
movement of the firm. This type of software will probably
have to be designed specifically for the firm. Since the
chief financial officer will use this type of software
often, its design should be more generally applicable than
that which will be used by the general manager of the firm.
This applications software used by the manager will probably
be used as either diagnostic or predictive tools designed to
identify what is wrong (or right) with the financial health
of the firm, or to allow the financial manager to chart the
movement of the firm given a set of varying parameters.

In the Chief financial officer's other role, as the
manager of the firmfls financial information, software will
be used for data manipulation and output in such a form that
it might be used for decision making by other managers
within the firm. Software for financial report generation,
tax calculation, insurance and payroll generation will be

used within this area of the financial manager's duties.

89

These types of software are designed for specific
applications, but are in suCh general use from firm to firm
that they should be able to be purchased and used ”as is",
or with minor modifications. Here, again, the software is
descriptive in nature, and is used to describe the current

financial status of the firm.

4.2.2 Accounting

 

 

The accounting manager of the firm oversees the
financial accounts of the firm, oversees the generation of
the firm's financial statements, and generally tries to
maintain adequate, accurate financial information for firm
decision making. Information flows come from the chief
financial officer of the firm, data processing, purchasing
and egg marketing. Information will take the form of data
which lists transactions and their dollar amounts, and
should be used for updating the accounts of the firm.

The functioning of the firmfs accounting department has
been greatly enhanced by the advent of the computer. More
information can be collected, generated and made available,
iJla shorter amount of time» for firm decision making than
was true before the computer became of use in the accounting
functions. The computer is used by the accounting

department to describe the current state of the firm and

9O

generate reports whiCh will be used in the decision making
of others.

Accounting software is fairly standard from firm to
firm and should be able to be purchased and used by the firm
with little or no modification. The most difficulty the
firm will have in purchasing accounting software will be
from selecting from the many software packages available

from many different vendors.

4.2.3 Purchasing

 

 

The purchasing subunit of the firm is in charge of all
purchases which must be made by all of the other subunits of
which the firm is formed. PurChasing must also keep track
of inventories of stocks of purchased inputs whidh will be
used over time. ‘When these stocks become low, purchasing
should reorder them automatically.

Problem solving in this subunit of the firm takes the
form of what to purchase, how much to purchase, and at what
price purChasing should take place. Information flows come
to purchasing chiefly as orders from other areas of the
firm, prices of purchased goods from outside the firm, and
purchase price limitations from the chief financial officer.

The computer can be used by purchasing as an aid in
account maintenance, inventory control, and in the buying

functions. The account maintenance and inventory control

91

functions should be able to be handled by data base
management software whiCh is fairly easy to adapt to tasks
such as these. Here, the computer is used in decribing the
current state of accounts and inventory stocks, and gives
the firm more control by making it more informed. The
buying functions can be enhanced by telecommunications
software which is also used as a descriptive tool to tell
purchasing of current prices, and current availability of

some of the purchased inputs which the firm needs.

4.2.4 Data Processigg

 

 

Data processing is the subunit of the firm in which the
computer is actually located. Though data processing is an
entity separated physically from either accounting or
purchasing, the function of the data processing unit cannot
be separated from either of these other subunits of the
firm. The data processing unit of the firm actually
maintains the financial accounts of the firm and manipulates
them when transactions occur. Data processing also
maintains the inventory list of the firm and updates it

when stocks are exhausted, or repurchased and brought in.

Decision making and problem solving are minimal in this

subunit of the firm since the function of data processing is

92

simply to carry out the instructions of accounting or

purchasing on how to store and manipulate data.

 

 

4.2.5 Computer Adoption and Software Design

The financial operations unit of the firm will probably
be the first of all the units of the firm in adopting and
using the computer as an integral tool in the management of
its operations. Personnel in this area will much more
readily adapt to its usage. This is chiefly due to the fact
that the computer is acting, in many cases, as a simple
adding machine and is not functioning in an area in which
personnel do not think that it belongs. In this area of the
firm, personnel will see the computer as an aid, rather than
as a replacement for the human entity.

Much of the software which will be used in this area of
the firm is readily available from vendors who specialize in
software for a firm's financial operations. Financial
analysis software, including account maintenance,tgenera1
ledger, accounts payable and receivable, and payroll are all
available to the firm. Software for inventory control,
purchasing, billing, etc., is all available and ready to
use. Data base management software that is both easy to use
and readily adaptable to a particular function can be
obtained by the firm and introduced into the firm's

operations without a great deal of effort.

93

Specific applications software, such as that whiCh will
be used by the chief financial officer of the firm, may be
general enough that it may be purchased and used, rather
than having to be designed specifically for the firm, at
great expense. Even if the software must be designed
specifically for the firm, the financial officer may be able
to use the software package often in making similar types of
decisions and thus bring down the per use cost of the
software.

Other than for the chief financial officer, who can use
the computer in predictive and diagnostic areas, the use of
the computer, within the financial operations section of the
firm, is limited to descriptive functions suCh as describing
the current financial state of the firm or describing the

current state of inventory.

4:; Hatchegy Operations

 

HatChery operations consist of the firm's breeder
flocks, the hatchery unit itself, and the firm's pullet
flocks. At the head of these subunits is a manager who
oversees the operation of this subunit of the firm. At the
head of the entire hatchery operation is a general manager
who oversees and coordinates the operation of all three of

the division's subunits. This section of thetdissertation

94

will look at the hatChery operation as a whole, the general
manager in charge of it, and then.at each of the subunits,

separately.

4L3.1 General Manager pf Hatchery gperetions

 

 

The general manager of hatchery operations must oversee
the long term operation of each of the subunits of this
division of the firm and coordinate the activities of each
of them. Through these actions, the activities of each of
the subunits should mesh with the activities of eaCh of the
others such that there is no wasting of the firm's
resources. The general manager must coordinate the
placement of breeder flocks with hatching egg production,
hatching egg production with hatchery operations, and
hatchery operations with pullet growout. A lack of
coordinating effort can lead to unused resources which are
costly to the firm.

The general manager must also coordinate the activities
of this division of the firm with the activities of the
other units of which the firm is made. The firm's feed mill
will have no idea of how much feed to mix or which special
ingredients to order, or which diets to formulate if the
manager of the hatchery unit does not communicate with it in
an effort to coordinate feed production. If there is no

coordination between the egg production unit of the firm and

95

hatchery operations, egg production facilities can stand
idle for want of pullets, or pullet flocks can grow old
waiting for a place in which to be housed.

Last, the general manager of hatchery operations must
coordinate the activities of this division of the firm with
the long term plans for the firm's operation, which have
been developed by the firm's general manager. If the long
term plans of the firm include expansion, the hatchery unit
needs to look for excess capacity in its existing
facilities, and decide how this excess capacity might be
used to its best advantage. If no excess capacity exists,
then hatchery operations must begin to look at the possible
expansion of its own facilities.

Each coordinating activity which the general manager
must make affects his division for an extended period of
time. Decisions at this level of the firm.are tactical in
nature and will affect the firm for a period of from only
several days to several production cycles.

Information flows exist in both directions between the
manager of hatchery operations and the subunits in this
division of the firm, the general manager of hatchery
operations and the other divisions of the firm, and between
the general manager of hatchery operations and the general
manager of the firm. These information flows, together with

information from outside the firm and information from the

96

manager's store of management skills, are used to help the
manager to pick the correct alternative solution to any
problem.

The small computer can best be used as an aid to the
general manager by making projections of expected egg and
hatched pullet production, keeping production records, and
allowing'the general manager to make quick comparisons to
strain standards. Through the use of the small computer,
the general manager can coordinate production of the
expected number of pullets needed in the future with the
placement of breeder flocks, know how many fertile eggs a
particular breeder flock has laid, or see that a pullet
flock is lighter in weight or higher in mortality than
strain standards would predict.

Computer software to aid the general manager in
decision making would take the form of specific applications
software for production predictions and strain standard
comparisons, and data base management software for keeping
production records. In this case the functions performed by
the data base management software are descriptive. The data
base created by this software can be used, however, in
conjunction with applications software in the diagnostic and
predictive functions associated with comparing and

predicting breeder flock production.

97

4.3.2 Breeder Flocks

 

The breeder flocks subunit of this division of the firm
furnishes eggs for the hatchery. The manager in charge of
breeder flocks is concerned with the day to day activities
associated with these flocks and thus is an operational
decision maker. The manager is concerned with the health
and well being of the flocks, and most of the problems which
must be solved are associated with them.

The information flows associated with this decision
maker come from the flocks themselves in the form of daily
egg production, feed and water consumption, air movement,
house temperature, and mortality figures. The manager
should keep and study them to discover anything out of the
ordinary. Other information flows come down from the
general manager of hatchery operations in the form of
breeder flock schedules, hatching egg orders, and feedback
from the hatchery as to the hatching quality of the eggs
received. Information from outside the firm comes to the
manager in the form of publications, extension meetings,
etc., and is used to update the manager's store of
management skills.

Data base management software is probably the most
applicable to the breeder flock manager's usage and should

be used to keep daily flock management data. If such data

98

as hatching egg production, feed and water consumption,
house temperature, and mortality are gathered on a daily
basis and made easily retrievable through the use of data
base management software, the manager can easily look at,
and compare, today's figures with those from the immediate
past in order to discover unusual numbers which might
indicate problems. This software which describes the
current state of the breeder flocks will probably need to be
used in conjunction with applications software to allow the

flock manager to diagnose any problems which might exist.

4.3.3 Hatchery Unit

 

The hatchery unit actually hatches the eggs and
produces the chicks used by the firm for egg production.
Decisions made by the manager of this unit are operational
in nature and are made in conjunction with the daily running
of the hatching unit. Information flows consist of data
generated within the unit, directives from the general
manager of hatchery operations, and information from the
manager's store of management skills. The manager has the
option of seeking information from outside of the firm,
either in response to a particular problem, or as the result
of a desire to expand the store of management skills.
Information flows from the general manager deal with

scheduling of hatches, problems with hatchery operations,

99

and generally deal with the minimizing of any barriers to
the flow of production from the hatchery unit.

Data generated within the hatchery unit might consist
of the number of pullet chicks hatched, fertility,
hatchability, Chick weights, debeaking and vaccination
information, general thriftiness of the chicks, and
incubator and hatCher data such as temperature and relative
humidity. All of these data can be used by the manager to
determine whether or not hatching unit operations are
working as they should. As with the manager of the breeder
flocks, data base management software, describing the
current state of the unit, could be used for keeping these

types of data.

4.3.4 Pullet Growout

 

 

The pullet growout section, of this unit of the firm,
is in charge of maintaining a favorable environment for the
growing chicks in an effort to deliver to the egg production
facilities the best possible started pullets. Again, at
this level of the firm, decisions whiCh must be made by the
manager are operational in nature and deal with the day to
day operations of this subunit of the firm. Information
flows to be used in the decision making process consist of

data generated within the flocks themselves, flows from the

100

manager's store of management skills, information from
outside the firm, and information from the general manager
for hatchery operations.

Information generated within the flocks on a daily
basis consists of mortality, feed and water consumption, air
movement, and house temperatures. The manager might weigh a
representative sample of pullets weekly to check the
progress of their growth. The manager might also note such
things as vaccinations, specific illness or general
unthriftiness of the flock, and touch-up debeaking on a per
incidence basis. Information gathered from the flocks can
be stored and later utilized in the decision making process
through the use of data base management software, and
applications software which will allow the manager to

compare current production to a standard.

4.4 Feed Production

 

 

 

The feed unit is broken down into two subunits, one
dealing with feed manufacturing and storage and the other
dealing with feed delivery. Each subunit is headed by a
manager, who must oversee the operation of his own subunit
and coordinate the flows of resources within. The general
manager of the feed unit is in charge of the entire unit and

oversees the operation of each of the subunits and

101

coordinates movement between them, and between them and the

other parts of the firm.

4.4.1 General Manager pf the Feed Production Unit

 

 

 

The general manager of the feed unit is in Charge of
overseeing the actions of the entire unit as well as
coordinating the interaction between the unit and the other
areas of the firm. Information flows exist between the
general manager of the feed operation and the subunits (feed
formulation and storage, and feed delivery) of the feed
operation, and between the general manager of the feed unit
and most of the other areas of the firm (the one area of the
firm to which the feed unit will have the weakest link, if a
link exists at all, is the egg processing and marketing
unit).

Particularly strong information flows exist between the
feed facility and the egg production unit of the firm and
between the feed facility and the hatchery unit. The
correct feed must be provided to the birds whether they are
breeder birds, growing pullets, or laying birds.

Another strong link exists between the feed unit and
the financial operations unit of the firm. The feed unit
must work closely with all three subunits of financial
operations (accounting, data processing, and purchasing).

Orders for feedstuffs must go through purchasing. When a

102

feed delivery is made to a particular flock of birds, the
feed unit must inform accounting so that the flock can be
charged for the feed. As the result of any interaction,
data processing has to be informed so that account files and
inventory data bases may be updated.

Decisions made by the general manager of the feed unit
are tactical in nature and affect the operations of the firm
for an extended period of time. A decision by the general
manager to not make pelleted feed, or not deliver feed in
bags, or not deliver feed in less than ten ton units could
have a marked effect on the flocks for which the feed is
made.

The general manager of the feed operation must make
sure that orders for feed are correctly formulated, that
feedstuffs are stored properly, that mixed feed is delivered
promptly, and that feedstuffs are purchased at the lowest
price (in conjunction with purChasing). If these things are
not done, the firm can be affected for an extended period of
time.

The computer can be an effective aid to the general
manager in feed formulation, making purchasing decisions,
and projecting the future needs for feed by the firm. Any
of these uses calls for specific applications software which
must be designed with the specific use in mind. Since feed

formulation is fairly standard from one firm to another,2

103

software for feed manufacturing may be available from a
vendor or from a Land Grant university. Software is used by
the manager of the feed operation in describing the current
state of the unit, diagnosing what is wrong, predicting
future uses and needs for feed and ingredients, and

prescribing possible solutions to a problem.

 

4.4.2 Feed Formulation and Storage

This subunit of the firm is in Charge of the
manufacturing and mixing of feed, and the storage of
feedstuffs in such a way that they maintain their
nutritional value. Decisions made by the manager of this
subunit of the firm are operational in nature and will have
to be made on a day to day basis. Decisions made by the
manager will involve making sure that the correct feed
formulation is used in mixing an order of feed, that the
correct feedstuffs are used, that the general manager of the
feed unit is notified as to which feedstuffs in inventory
are in short supply and need to be ordered, and that the
feedstuffs in inventory are stored correctly to avoid
mixups.

Information to aid in the decision making process is
generated from within the subunit in the form of daily

operating information such as the amounts and types of feed

104

which must be mixed, what feedstuffs are involved in the
formulation, and the state of the inventory’of individual
feedstuffs. Information also comes from the general manager
of the feed unit in the form of new feed formulations,
orders for feed, and substitutions of one feedstuff for
another.

The computer can be an aid in the decision making
process particularly as an information keeping tool for the
manager of the feed mill. The computer, with data base
management software, can be particularly adept at describing
current inventories of feedstuffs so that the manager can
know which feed ingredients are on hand. The computer can
be used to store different feed formulations so that they
may be prescribed in the future in response to new
parameters put forth by the general manager of the feed
operation. If none of the feed formulations which have been
stored are suitable, the computer can be used with feed
formulation software to develop new feeds using different

feedstuffs or feeds with different nutrient limits.

4.4.3 Feed Delivery

 

 

This subunit of the firm is involved with the prompt
and timely delivery of feed for the adult birds and growing
pullets which are owned by the firm. Problems which must be

solved by the manager of this area of the firm are

105

operational in nature and are involved with the day to day
running of the feed delivery unit. The problems involve
feed delivery, truck routing, and truck maintenance. The
problems associated with feed delivery involve getting the
correct amount of the correct feed to the correct flock at
the appointed time. In truck routing the manager must be
concerned with the delivery of a maximum amount of feed for
a minimum number of miles driven or a minimum amount of
time. If the manager sees that two batches of the same feed
are to be delivered on a particular day to two separate
facilities, it is likely that by delivering both batches in
one trip some effort may be saved. The manager must be sure
that scheduled truck maintenance takes place in a
preventative effort against costly“breakdowns, and should
they occur, the manager must make sure that breakdowns are
fixed as promptly and as efficiently as possible.
Information comes from the general manager in the formv
of feed type, batch size, and delivery destination. This
information is used along with internal information on
destination distances and other feed orders for identical
feeds in order to arrive at truck routing schedules which do
away with duplication of effort, thereby reducing the cost
of the operation of the firm. Other information generated
within the feed delivery unit involves the truck maintenance

schedules which the manager will follow.

106

Data base management software can be used by the
manager of the feed delivery unit for keeping truck
maintenance schedules and truck histories. Specific
applications software can be designed ( or may be available
from a vendor) for least cost truck routing to either
minimize the numbers of miles driven, or the amount of time

needed, per ton of feed delivered.

4.5 Egg Production

 

The function.of the egg production unit is to provide
the eggs whiCh the firm will process and attempt to sell in
the marketplace. The egg production unit consists of a
number of separate flocks of varying ages and stages of
production, which are located on one or more production
sites. The firm hierarchy will contain a general manager of
the egg production unit whose duties will include
coordinating the activities within the egg production unit,
itself, coordinating the activities of the egg production
unit with the activities of the other units of the firm, and
coordinating the activities of the egg production unit with
the long range plans of the firm, as a whole. Each flock
(or group of flocks in an egg production complex) will have
a manager who must oversee the operation of the production

unit and ensure the well being of the birds.

107

4.5.1 General Managgr c_>_f_ the Egg Production Unit

 

 

The general manager of this area of the firm is in
charge of coordinating the activities within the egg
production unit, and coordinating the activities of the egg
production unit with the rest of the firm. Information
flows exist between the general manager and each of the
production units which make up the egg production area of
the firm.

The general manager of this unit of the firm has
informational ties with eaCh of the other areas of the firm
in an effort to coordinate the needs of the egg production
unit with the production of the hatchery unit, to
coordinate the needs of the egg production unit with the
production of the feed unit, and to coordinate egg
production with the needs of the egg processing and
marketing facility. The general manager must make future
pullet replacement needs known to the hatchery unit, the
need for feed known to the feed production unit, and
expected egg production numbers known to the egg processing
and marketing facility so that that area of the firm can
plan its own workings.

The general manager of the egg production unit also
maintains a strong informational tie with the general

manager of the firm. If the firmfs long term plans involve

108

expansion, the general manager of the egg production unit
needs to be involved in the planning. This flow of
information is chiefly outward moving, toward the general
manager of the firm, and contains the information whiCh the
general manager of egg production feels is the best way to
expand production. This information is used by the general
manager of the firm in making the strategic decisions
involved in expansion.

Decisions made by the general manager of the egg
production unit are tactical in nature. These decisions
affect the firm for an extended.period of time. .Decisions
such as whether or not to molt a particular flock, or to
what level should the protein in a flock's feed be adjusted,
or should the firm try intermittent lighting with a flock
are all examples of the types of tactical decisions which
the general manager has to make. In many cases the
decisions to be made involve interactions with the other
areas of the firm: this is the case if the general manager
decides to lower the protein level in a flockds feed and has
to let the feed production unit know of the decision.

The computer can best function as an aid to the general
manager of egg production through its ability to keep
.production records, make production projections, and compare
current and past production records to each other and to

some set standard. Production records for each flock can

109

best be recorded with the aid of data base management
software. This type of software will allow the manager to
keep a great deal of information on each flock. Such
information items as egg production, mortality, feed and
water consumption, current feed specifications, vaccination
and medication histories, etc., can all be recorded with
this type of software and can later be used in the decision
making process.

Production projections and comparisons between current
and past production, or between actual production and a
standard, all need specific applications software. This
type of software will probably not be available to the firm
from a vendor, and its design will have to be contracted out
to a programmer. If the software will be used by the
general manager often in his decision making, the cost will
be worthwhile and the manager's decision making abilities

will be enhanced.

4.5.2 Egg Production Flocks

 

The manager of each egg production flock is in Charge
of maintaining an environment which will enhance the
production of the firm's laying hens. The flock manager
must be familiar with the everyday happenings within the
flock in order to realize the presence of a problem and act

upon this realization.

110

Two types of information flows help the manager in his
decision making; The first type of information used is that
which is generated within the flock. Such items as egg
production, mortality, temperature, air flow, and feed and
water consumption fit within this area and help in the day
to day operations of the flock.

The other flow of information comes from the general
manager of the egg production unit. If mortality is higher
than should be expected, the general manager should arrive
at a solution to the problem and give directions to the
flock manager on how to effect a remedy. A similar process
will take place if the egg processing unit should inform the
general manager that the quality of eggs from a particular
flock is muCh lower then should be expected.

Decisions made by the flock manager are operational in
nature and deal with the day to day layer flock management.
The computer can be of benefit to the flock manager Chiefly
as a storer and retriever of information. Data base
management software is ideal for this purpose and should be
readily available from a vendor. By using this type of
software, and by setting up the data bases correctly, the
flock manager should be able to store information easily and
quickly, and then retrieve it at a time when the information
can be used in the decision making process. If data base

management software is not available to the floCk manager,

111

applications software programs will have to be developed
whidh will allow the collection and use of flock management

figures.

egg Egg Processingand Marketing

 

 

The egg processing and marketing unit of the firm must
put the eggs in the final form in which they will be
purchased by retail consumers, make the eggs available to
the market at whiCh they are targeted, and deliver the eggs
to that market so that they may be consumed. This unit of
the firm consists of four subunits, each of which takes on a
different function. The subunits are egg assembly, egg
processing, egg marketing, and egg delivery. Each subunit
of the egg processing and marketing division is headed by a
manager who oversees the operations of that subunit. The
operations of the egg processing and marketing unit, as a

whole, are watched over by the general manager of the unit.

4.6.1 General Manager gf the _Egg Processing and
Marketing Unit

 

 

 

The function of the general manager of egg processing
and marketing is to coordinate the activities of the
subunits of this division, coordinate the activities of
this division with the activities of the other divisions of

the firm and coordinate the activities of this division with

112

the over-all operating of the firm. The general manager is
directly answerable to the general manager of the firm, and
on the same plane of the firm's hierarchy with the general
managers of the other divisions.

Decisions made by the general manager of egg processing
and marketing are tactical in nature and serve to enhance
the general flow of the workings of this operation, alone,
and within the firm, as a whole. Examples of the decisions
to be made by the general manager of this division would
include the decision to pack eggs for retail in two-dozen
cartons or the decision to purchase two 70 case per hour egg
packing machines rather than one 140 case per hour machine.
In either case, the decisions made by the general manager
will affect the firm for an extended period of time.

Flows of information exist between the general manager
of the egg processing and marketing unit and the general
manager of the firm, the general manager of this unit and
the general managers of the other units of the firm, the
general manager of this unit and the managers of the
subunits over whiCh he presides, and the general manager of
this unit and information sources from outside the firm.
All of these information flows will aid the general manager
of this unit in decision making, or aid the other managers
of the firm in their decision making.

The computer can be of use to the general manager of

113

the egg processing and marketing unit as an aid in
projecting and planning the future workings of this unit of
the firm, and as a tool for comparing the present
‘performance of the unit with.past performance or‘expected
performance standards. Software for making comparisons
between present performance and some other performance
standard, and software whiCh can aid the general manager in
making plans for the future of this area of the firm, will
more than likely be applications software whiCh will need to
be designed specifically for the needs of the general

manager of the unit.

4.6.2 Egg Assembly

 

In the modern integrated egg production firm, whiCh is
often characterized by an egg processing plant situated at
the same location as the egg production facilities, the egg
assembly function is minimal and can often be done away with
as a separate entity within the firm hierarChy. If the egg
assembly subunit does exist, its function will be to bring
the eggs together from several widely scattered locations,
to one central point, at which time their care will be
turned over to the egg processing subunit of the firm.

The manager of the egg assembly subunit is an

operational decision maker. The problems dealt with, which

114

will have to be acted upon, concern the day to day operation
of this subunit of the firm. The problems with which the
manager must be involved include egg assembly, truck
routing, and truck maintenance. The problems associated
with egg assembly involve getting the eggs from the
production unit to the processing plant promptly and with no
detrimental effect on their general quality. In truck
routing, the manager must be concerned with bringing
together the maximum number of eggs at minimum expense.
Lastly, the manager needs to be sure that scheduled truck
maintenance takes place in a preventative effort against
breakdowns.

Information used in the decision making process comes
from the general manager of the unit, and is used to
coordinate the actions within this unit of the firm. This
information takes the form of expected egg numbers and
pickup locations. This information is used along with
information from within the subunit concerning distances to
the pickup location and other egg pickups within the same
general location to develop a truck routing scheme. Other
information used within this subunit will involve the truck
maintenance schedules which the manager will need to follow.

Data base management software can be used by the
maJLager of the egg assembly subunit for keeping truck

maintenance schedules, truck histories, and egg pickup

115

locations and distances. Specific applications software
will need to be designed for least cost truck routing.
Least cost truck routing software may be available from a

vendor.

4.6.3 Egg Processing

 

Egg processing receives the eggs from the egg assembly
subunit and processes them into a form which will be
acceptable to the consumer. The egg processing subunit of
this division of the firm is headed by a manager who
oversees the day to day operating of the subunit and helps
to ensure that operations take place in a smooth and orderly
manner. The manager of this subunit is directly answerable
to the general manager of the egg processing and marketing
unit and will involve the general manager in solving any
problems other than those dealing with day to day matters.

Information to help in the decision making process is
generated within the subunit in the form of production
figures, data related to the operating of the processing
machinery involved, and egg cooler inventory figures. These
data can be stored and then retrieved to be used in the
decision making process with the help of data base

management software.

4.6.4 _Egg Marketing

 

116

The function of the egg marketing subunit of the firm
is to find buyers for the firm's product at the best
possible price. The manager of this subunit will need to
be concerned with.the number of eggs available to be sold,
the price of eggs, established customers, new accounts,
marketing strategies, and sales efforts. In a very large
integrated egg production firm, this subunit may become an
entity separate from the egg processing unit, and the
manager of the egg marketing subunit may become the general
manager of a division of the firm with managers in charge of
eaCh of the marketing functions.

In this case, however, the manager of the egg marketing
subunit is an operational decision maker and is concerned
with the day to day functioning of this subunit of the firm.
Problems which must be solved include finding buyers for the
eggs which have been produced and processed.in.other areas
of the firm, getting the best possible price for the eggs
produced, overseeing the sales and marketing staff, and
working with the general manager todevelop new marketing
strategies to allow the firm to increase its market share or
increase the egg price achieved.

Information used in the decision making process comes
from the general manager of the unit in the form of figures

on the number and size of eggs available for sale at any

117

given time. Information generated within the subunit,
itself, includes feedback from the sales staff, orders
placed for eggs, and egg prices actually achieved. The egg
marketing subunit relies more‘heavily'on information from
outside the firm in its decision making than do other
subunits within the firm. Pricing information comes in in
the form of Urner-Barry reports or government publications.
Feedback from customers through this subunit gives the
entire firm some idea of the quality of the job that it is
doing.

The computer can be an effective tool in the management
of the data used in the decision making process. Data base
management software can be used to keep track of individual
sales by the customer, salesman, size of the sale, egg size
breakdown, price, and feedback from the customer in
connection with the individual transaction. At any time, the
data can easily be retrieved and used in the manager's
decision making. Telecommunications software can also make
the small computer an important tool to the manager of this
division. Since this division relies heavily on information
from outside the firm, the computer can play an important

role in data collection.

4.6.5 Egg Delivery

The egg delivery subunit of the firm receives the eggs

118

from the egg processing subunit and delivers them to a
customer who has purchased the eggs through the egg
marketing subunit. The manager of this subunit is an
operational decision maker and is concerned with the day to
day operation of this area of the firm. Problems with which
the manager must deal involve transporting the firm's
finished product to the customer promptly, safely, and with
no detrimental effects to quality, delivering a maximum
number of eggs per unit of expense, and maintaining the
trucks used by the subunit of the firm in a condition which
prevents breakdowns and assures the maximum useful life of
the asset involved.

Information used in the decision making process
includes information from the general manager of the unit on
delivery locations, and egg shipment sizes and dates.
Information generated within the subunit would include truck
maintenance schedules, truck histories, distances to
delivery locations, and other accounts in the same general
area. Customer location data can be used in routing trucks
in a manner that reduces the cost to the firm.

Data base management software can be used to keep track
of truck maintenance schedules, and to keep track of truck
histories. Specific applications software must be developed
whiCh can provide the manager with truck routing schedules

which allow the delivery of a maximum number of eggs with a

119

minimum number of miles driven or a minimum amount of time
used. Truck routing software may be available from a vendor
which will fit the needs of the egg delivery subunit. If
truck routing software is not available to the firm, the
firm can have a truck routing software package developed
which will be useable to all three of its transportation
related subunits (feed delivery, egg assembly, and egg

delivery).

Chapter E

SUMMARY

The fully integrated egg producing firm is made up of a
number of units, each specializing in a different phase of
the firm's production process. Each of these units is made
up of several subunits which break that unit's main
functions up by major task. At the head of each subunit is
a manager who is in charge of making the decisions
associated with the operation of that subunit of the firm.
These managers must oversee the activities within each of
their respective subunits and make sure that each of these
subunits performs up to the firm's expectations.

At the head of eaCh of the units of the firm is a
general manager. The general manager's duties include
coordinating the activities between the various subunits
within the unit, and coordinating the activities of the unit
with the activities of the other entities of which the firm
is made. The general manager of each of the firm's units
must be concious of the types of decisions made in each of
the other areas of the firm in order to better coordinate
the interactions between the unit and these other areas.of

the firm.

121

The general manager of the firm is responsible for
guiding the firm's long term functioning and operation.
Duties of the general manager of the firm include making
sure that a coordination of activities exists between the
different units of the firm and planning the future growth
of the firm, whether that future growth takes the form of
the expansion of existing facilities or movement into other
areas of the production/marketing process.

The firm is thus managed by three different levels of
decision makers, the general manager of the firm, the
general manager of each production unit, and the manager of
eaCh production subunit. Decision makers within eaCh level
need to make similar types of decisions in fulfilling their
management duties. Since many of the types of decisions to
be made are similar, they can be categorized by type. The
three categories into which the decisions to be made within
the firm can be placed are strategic, tactical, and
operational.

Strategic decisions guide the long run operation of the
firm. Decisions whidh are made in conjunction with planning
the future course of action which the firm must take are
strategic decisions. These decisions would include those
dealing with the firm's expansion, movement into different
areas of production, movement out of an area of production,

or the decision of whether or not to move out of the

122

production process, altogether.

Strategic decisions are very difficult to reverse
without having negative effects on the firm, if the decision
maker discovers that a mistake has been made. For this
reason, the general manager of the firm must exert special
care in choosing the correct alternative from all of the
possible courses of action which might be taken. In
Choosing the correct alternative, the general manager must
rely'on management skills, information from managers at a
lower level of the firm, and information extraneous to the
firm, itself. Since it is imperative that the general
manager Choose the correct alternative, information from
others within the firm and information from outside of the
firm become especially important in the decision making
process. The greater the amount of pertinent information
whiCh the general manager has to work with, the greater are
the chances of choosing the correct alternative.

The small computer can be a great deal of help to the
decision maker, at this level, through the gathering and
manipulating of information which can be used as an aid in
the general manager's problem solving task. Projections and
simulations can be used to manipulate information and
present it in a form in which it might be used in decision
making. Of particular importance to the manager are

financial simulations which can be used in investment

123

decision making. Computer worksheet software also may be
helpful in this area. Information can be gathered by the
computer from outside of the firm through the use of
telephone connections and telecommunications software. This
information can be used by the general manager in decision
making.

Tactical decisions affect the firm for an extended
period of time. This time period may vary from several days
through one or two production cycles. Tactical decisions
are more easily changed than are strategic decisions, and
the effects of a mistake in decision making will not be as
great, nor will they'be as long lasting as are the effects
of a poorly made strategic decision. Tactical decisions are
made at the middle level of firm management, by the general
managers of the various production units.

Tactical decisions would include those made by the chief
financial officer concerning the financing of a particular
project, those by the general manager of the hatchery unit
concerning the coordination of breeder flock placement with
the future need for hatching eggs with the future need for
started pullets by the egg production unit of the firm, and
that by the general manager of the egg pmocessing and
marketing unit to purchase two 70 case per hour egg packing
machines rather than one 140 case per hour egg packing

machine.

124

Tactical decisions are made based upon the problem
solverhs store of management skills, information from other
areas of the firm, and information from outside of the firm.
Information from outside of the firm is less important, and
a reliance on the manager's store of management skills is
more important, to the decision making process than was true
in the case of the general manager of the firm.

The computer can be used by the managers of this level
of the firm as a tool in planning, by making projections and
simulations, and by making comparisons between the actual
performance of a particular unit and what is expected.
Here, the value of the computer is as a manipulator of
information. The computer manipulates the information and
presents it in a form in which it might be used in the
decision making process. The small computer can also be
used in making those financial decisions which the manager
of this level must make. Capital expenditure analysis
software can advise the manager of the financial
attractiveness of a potential investment which he may make.

Operational decisions are made on a daily basis by the
managers of the individual production subunits of the firm.
They are very short term in nature (daily), and once made
are easy to reverse. Typical operational decisions would
include decisions as to whether or not a laying house is too

warm or has too high a concentration of ammonia in the air,

125

whether or not a truck engine needs to be overhauled, or
whether or not the temperature and humidity within an
incubator unit are correct for embryonic development.

In making operational decisions, the manager relies on
information from a store of management skills, information
from the general manager of the division of the firm,
information from within the subunit, and on information from
outside of the firm. Information coming from outside of the
firm is far less important and information coming from the
problem solver's store of management skills is far more
important to the manager, at this level of the firm, than is
true with managers at a higher level.

The small computer can be important to the manager as a
storer of information. Once stored, the information should
be able to be easily retrieved to be used in the decision
making process. The use of this stored information takes
the form of as a comparison between the present performance
of the subunit and some expected performance standard. ' By
using this information the manager may be able to discover a
deviation from the normally expected performance of the
subunit, and take some form of corrective action.

The computer can also be used in the scheduling of
daily activities. By allowing the manager to see, on any
given day, those duties which are pressing, the computer can

make the manager more effective in the use of time. The

126

computer can also serve the manager as a reminder of the
jobs which are easily neglected or postponed.

Table 13 summarizes, by level of management, the
different types of decisions to be made within the firm and
the informational and software needs for making these

decisions.

Table 13.

Decision Types and Examples,

127

Information Needs,

and Software Needs by Level of Management
of the Integrated Shell Egg Producing Firm.

 

Level ofManagement

Upper

Middle-—

 

Lower

(Firm Genrl Mngr) (Unit Genrl Mngr) (subunit Mngr)

 

Type of

decisions
made:

Examples
of
decisions:

Inform-
ation
needs:

Software
needs:

Strategic
(Long Range)

Expansion of
existing faci-
1ities. Move-
ment into (or
out of) other
areas of prod-
uction/marke-
ting Channel.
Decisions
dealing with
long range
operation of
the firm.

Relies heav-
ily on infor-
mation from
managers at
lower levels
and informa-
tion from
outside of
firm.

Telecommuni-
cations soft—
ware for gath-
ering infor-
mation. W6rk-
sheet software
for manipula-
ting and pre-
sentingfinfor-
mation for
making deci-
sions. Appli-
cation sftwr.

Tactical
(Intermediate
Range)

Decisions to

coordinate oper-
various subunits.

Decisions to

coordinate oper-

of unit with
units of the
firm. Breeder
flock, layer

flock placement
Deci-
sions affecting

decisions.

Operational
(Short Range)

Decisions
about daily
operation of
subunit. Hse
environmental
factors.
Decisions
about whether
or not faci-
lity is func-
tioning up to
the expected.

intermediate range
market strategies.

Relies on infor-
mation from above
and below in firm

hierarChy, on

information from
outside of firm.
and on own store

of management
skills.

Telecommuni-

cations software

for gathering
information.
Database mgmnt

software for rec-
ording and mani-

pulating data.

Worksheet sftwre

for presenting

and manipulating
Applicat-

data.
ions sftwr.

Relies on
information
from managers
at higher
levels of the
firm, and on
information
from store of
skills.

Data base man
agment soft-
ware for stor-
ing and mani-
pulating daily
flock manage—
ment figures.
Specific app—
lications
software des-
igned to serve
as acalendar

Chapter g

CONCLUSIONS AND COMMENTS

 

This dissertation set out to satisfy three main
objectives. The first objective was to identify the type of
decisions which must be made at different levels of the
integrated egg producing firm. The second objective was to
identify the types and flows of information needed to make
each of the types of decisions, at each level of the firm
hierarchy. The third main objective of the dissertation was
to identify the possible uses of the computer in the firmhs
decision making process.

Decisions made within the firm can be separated into
three categories which are grouped by the period of time
over which the decision will affect the firm. The three
decision types are strategic (long range decisions),
tactical (short to medium term decisions), and operational
(daily decisions).

EaCh of these three types of decisons is closely tied to
a particular level of the management of the firm. Strategic
decisons are made by the firm's general manager. Tactical
decisons are made by the middle level of management of the

firm. This level of management consists of the general

129

managers of each of the production units of the firm.
Operational decisions are made by the lowest level of
managers of the firm, the managers of the individual
production subunits.

Whereas each of the three types of decisions is tied
closely to one of the levels of management of the firm, it
is not unforeseeable that there will be some interchange of
decision making duties within the normal operating of the
firm. It is not unexpected that the general manager of the
firm will need to make some operational decisions in the
course of managing the firm, or that the general manager of
the egg processing and marketing unit, for example, will
have to make some decisions which border on the strategic
decision classification. It is not expected, however, that
a manager at the lowest level of firm management will ever
have to make a strategic decision in conjunction with the
operation of the subunit of the firm.

The types and flows of information used in the decision
making process differ by type of decision, and by level of
decision maker within the firm. The general manager of the
firm, who is involved in strategic decision making, relies
heavily on information from the general managers of eaCh of
the production units and on information from outside of the
firm. The information from sources external to the general

manager's own store of management skills is used in

130

selecting the correct alternative in the decision making
process.

The general managers.of the production units also rely
on information from elsewhere in the firm (from the firm
general manager level, and from the managers of the
individual production subunits), information from outside of
the firm, and on information from the general managers'
stores of management skills in aiding in the decision making
process.

The individual managers of the'various subunits of the
firm rely on information from above them in the firm
hierarChy (information from the firm general manager comes
down, indirectly, through the production units' general
managers), information from outside of the firm, information
from within the production subunits, themselves, and
information from the managers' stores of management skills
to aid in choosing the correct alternative solution to a
problem.

The degree of a decision maker's reliance on either
outside information or information from the decision maker's
store of management skills varies by the level of the
decision maker within the firm. The general manager of the
firm relies much more heavily on information from other
managers within the firm and on information from outside of

the firm, in making the correct decision, than do the

131

general managers of the production units and the managers of
the individual production subunits. Similarly, the managers
of the production subunits rely more heavily on their own
stores of management skills in making decisions than do
managers at a higher level of the firm hierarchy.

Computer usage as an aid in the decision making process
varies by level of the firm. The general manager of the
firm can best use the computer as an information gatherer
and as a manipulator of information. Projections and
simulations tell the general manager how, given a set of
parameters, the system should act. If the simulation
correctly manipulates a number of variables whiCh have been
accurately input, the simulation should be accurate and of a
great deal of value to the decision making actions of the
general manager.

Computer usage at the middle level of firm management
takes the form of projections and simulations which allow
the manager, at this level, to chart the expected
performance of the unit and decide whether or not the actual
performance differs significantly from the expected.
Projections allow the general manager of the production unit
to plan future production around the needs of the unit, or
other units with whiCh it must associate.

. At the lowest level of firm management, the computer can

be used chiefly as a storer and/or comparer of information.

132

If daily production records are kept on a flock of laying
hens, the manager should be able to retrieve past
information pertaining to the flock, and then compare it to
present production or to some production standard. The
manager, at this level of the firm, can also use the
computer to aid in the scheduling of daily activities within
the manager's subunit.

The fully integrated egg producing firm is a complex,
ever changing entity which must depend on the unencumbered
flow of information for use in the decision making process.
Since the firm is so changeable, sometimes the flows of
information between different decision making entities
within the firm can be slowed. When this happens it is
impossible for the firm to react to a situation in a manner
which will allow for the avoidance of a problem or for the
taking advantage of a positive situation. Because the flow
of information is so important to the efficient management
of the firm, the managers within the firm should be
concerned with encouraging and enhancing this flow. The
computer can best be used in firm decision making as an aid

in encouraging and enhancing this flow of information.

APPENDIX

 

Small computer systems can play an important role in
both the production and economic management of an egg
producing firm. The computer can be used by managers to
obtain, store and manipulate information whiCh can be used
in decision making. This appendix will explore the
decisions which must be made in the egg production unit of
the integrated shell egg producing firm, the information
needs for decision making, and how the small computer can be
used.

There are three broad categories into whiCh the types of
software whiCh will be used with the small computer can be
classified. First, there is operating System and System
Utilities Software which is used to direct the action or
operation of the small computer and its peripheral devices,
to make the computer operate more efficiently. This
includes operating systems, themselves, which include
several brands and types, and system utilities such as
telecommunications software.

Second, is Widely Functional Software which provides the
user with the ability to make use of the small computer
without having to develop software for a specific function.
Widely functional software includes database management
software, word processing software, and computer worksheet

software.

134

The third type of software is Specific Applications
Software whiCh is written for a given problem situation and
whose design is dependant on the particular questions whiCh
must be answered. Included in this category is financial
management software such as accounting software, cash flow
projection generators, and capital expenditure analysis
software: and poultry management software which can generate
flock production records, compare production records to some
standard, or project flock production for some period in the
future.

In many cases, especially with flock production
management, the computer will act as a storer of
information. Records should.be kept by the manager which
concern many of the factors used in decision making.
Records which might be maintained concerning the eggs
produced include egg numbers, egg quality, shell quality,
and egg size. Records which concern feed include feed
consumption, and consumption of various nutrients and
ingredients (protein, energy, water, calcium, amino acids).
The manager might also record environmental information such
as house temperatures, air movement, and humidity.
Mortality, disease histories, vaccination histories, and
vaccination schedules should be maintained by the manager to
use as a guage of flock health.

All of this information can be recorded and stored using

135

either database management software or applications software
which has been designed specifically for the purpose of
creating a data base. Database management software is
nearly ideal for storing and manipulating this sort of
information. If specific applications software is used, the
manager should be prepared for the large investment in time
and money needed for the design of software to do the task.

The computer can also act as a storer of information
which pertains to the economic management of egg production.
Records can be stored which involve costs and incomes
incurred in the management of the flock. Egg prices
(including prices by size), egg receipts, and spent hen
receipts can be stored. Cost information which includes
feed prices, costs of supplies, utilities, insurance, labor,
pullets and.depreciation.can all be stored and utilized at
some later time in the decision making process. Here,
again, for storage of information, database management
software is nearly ideal.

Once the types of data to be recorded have been selected
and the data base set up, then information can be generated
and used for decision making. If the data base is set up
correctly, current figures can be used in conjunction with
past figures, or figures which represent some standard of
production, to act as a guage of the performance of a

particular flock. If current production does not meet

136

expected performance, then it is possible that the manager
may be able to remedy the situation.

Database management software has limited application in
manipulating data such that it can be used. Applications
software, which deals with the generation of production
figures from raw data in such a way that they might be used
in decision making is probably more applicable to this type
of work.

For example, if yesterday”s production figure from a
flock of birds was 60 eggs and the initial flock size was
2000 birds, this is only 30 percent production ( on a per
hen housed basis), and does not seem very good. If the
mortality, to-date, on the birds in the flock has been very
high, and only half of the original flock has survived, then
the hen day production figure is 60 percent. The 60 percent
hen day figure seems muCh better than 30 percent hen housed,
though 60 percent still does not seem like very good egg
production. If the production age of the bird is noted to
be 52 weeks of lay, however, the 60 percent hen day
production figure seems very close to what should be
expected.

In another case, a 60 percent hen day production figure
is about five percent below that whiCh the strain standards
indicate should be the case. This could be a signal that

there is some problem with the flock that could be corrected

137

by a change in management procedures. If, however, data
indicates that the flock has historically produced at a rate
of about five percent below the expected, then it can
probably be assumed that there is no deviation from the
flockhs normal performance, and therefore no problem (or the
problem is such that there is no immediate solution-- poor
water quality, insufficient ventiliation, crowding, etCJL

In each instance the value of the information to the
decision making process came from the comparison of a
current production figure to some other figure. This
allowed the current figure to be guaged as to the presence
of a possible problem.

The computer would serve, in this situation, as a
manipulator of information. The number of eggs the flock
produced did not provide much information as to the
performance of the flock, when used by itself. When used
with the number of hens housed, and the number of hens
surviving, to calculate hen housed and hen day production
figures, much more meaningful (to the decision making
process) information was generated. In addition to this,
when these flock production figures were compared to
information about expected egg production based on the age
of the flock, the 60 percent hen day production figure no

longer seemed to indicate the presense of a problem.

138

The following is a list of flock management information
which should be recorded, with a description of how each

piece of information will be used:

Management Information How Information will p3 Used

 

 

 

Current Date Used to guage currentage of birds,
current production period.

Date Beginning Used with current date to calculate

Production current age of birds and current

production period.

Age of Flock Used to compare current performance
Week of Production of flock to expected performance as
set by some standard of procuction.

Hens Housed Used to calculate production figures
to be expressed on a "per hens
housed" basis.

Mortality Used to calculate percentage
mortality (current and to-date),
number of "hen days" (current and
to-date). Compare mortality figure
to past flock performance to
determine if different from long
term. Compare mortality to
strain standard for same age flock.

Pullet weight Use as guage of health of bird,
presense of problem with over eating.
Compare to standard of body weight
for flock of same age and strain.
Used with spent hen price per pound
to calculate expected spent hen
receipts.

Egg Production Calculate "per hen housed" and "per
hen day" egg production figures.
Compare current figure to past flock
performance. Compare to strain
standard for same age flock. Will
be used in calculating costs on per
dozen basis.

Egg Size Distribution

Checks, Loss, and

Undergrades

Feed Consumption

Estimated Nutrient
Intake

Disease/Vaccination
History

Environmental Factors

139

Compare to past production or to
strain standard to determine if
distribution meets expectations.
Distribution will be used with
egg price per size to calculate
egg receipts.

Compare to past production and to
strain standard. Variation could
indicate problem, past disease
problem, warm temperatures, or age
of flock.

Calculate feed conversion per dozen
eggs, feed consumption per bird.
Compare to past performance and to
strain standard. variation could
indicate problem suCh as illness,
extreme environmental temperature,
or incorrect energy composition
of feed.

Intake of various nutrients such as
metabolizable energy, calcium, and
methionine can help to diagnose a
feed related problem if egg
production,egg quality. or feed
consumption figures indicate that

a problem exists.

A disease history of the flock may
explain some of the flock's problems
which are indicated by poor egg
production, egg quality. or feed
conversion. A vaccination history
may indicate that the time has come
for revaccination of the flock.

Environmental factors, suCh as house
temperatures or air flow through the
house, may help to explain or diagnose
problems which exist with the flock.

140

Database management software can be used to store
financial information generated by the egg producing firm.
This information then will probably need to be manipulated
in some way such that it can be used. This manipulation may
be through the use of applications software designed to
perform accounting functions suCh as payroll, billing, check
writing and report generation: through worksheet software
which allows the user to answer "what if" questions; or
through applications software designed to aid in financial
decision making.

The accounting functions are fairly standard. Because
of this, software to perform these functions should be
available from many vendors. The particular accounting
software package whiCh is purchased will probably depend on
the compatibility of the package with the small computer,
and on how well a given software package meets the user's
needs.

Minor projections and simulations can be done very
quickly with computer worksheet software. This software is
relatively easy to use, available from a vendor, and can be
easily programmed. This software allows the user to easily
answer questions which pertain to the resultant Change in
one variable due to the change in another (sensitivity
analysis). An example would be taking note of how the

firm's projected profit status would change as a result of a

141

change in either egg prices or feed costs..

Other software for financial decision making includes
software for doing simulations and projections, software for
analysing investment attractiveness, and software (other
than accounting software) which pertains directly to the
financial status of the flock. This last type of software
would need to be designed to utilize both floCk management
figures (egg production figures, mortality, flock age, feed
consumption, etc.), and flock financial figures (egg income,
pullet prices, feed prices, and other production and housing
costs and incomes) to calculate flock financial information
such as egg income per bird, per dozen, per period, or per
flock-to-date. Any of these figures which have been
calcualted can be used as a guage as to the flock's
financial performance.

The following list presents flock financial information
which should be recorded, and tells how this information can

be used:

Financial Information

 

Egg Prices

Spent Hen Price

Feed Cost

Pullet Cost

Other Costs

142

How Information will pg Used

Will be used in conjunction with egg
production figure to calculate egg
income, if eggs are sold on a "nest
run" basis. An egg price breakdown
by size would be needed for use along
with an egg size distribution if egg
income is not calculated on a nest run
basis. If egg price consists of a
"per-dozen" contract payment, this
figure could be used for calculating
egg income. Egg income figures should
be maintained for the current period
and for flock-to-date.

Used in conjunction with weight and
number of spent hens sold to calculate
income from sale of spent hens.

The feed price per ton will be used
with the number of tons consumed for
calculating total feed cost on both
current period and flock-to-date bases.
These figures will then be used with
egg production figures and bird numbers
to calculate feed cost per dozen and
feed cost per bird.

The cost of pullets should be allocated
such that the cost of the pullets is
spread out over the entire laying
period. This may be done on a per
dozen basis, per week of production,

by percent of total expected eggs, or
by some other method.

Other costs (housing and equipment,
utilities, labor, insurance, taxes,
supplies, packing materials, trucking
and miscellaneous) should be calculated
on both a per dozen and on a flock-
to-date basis. These cost figures

will be added to other cost figures

to arrive at total production costs.
These total production costs then will
be subtracted from total receipts to
arrive at net receipts figures for the
floCk--both per dozen and flock-to-date.

143

A specific example of how the computer can be used in
the manager's‘decision making can prove the usefulness of
the small computer in poultry firm management. The decision
of whether or not a particular flock should be melted and'
allowed to produce through a second egg production cycle is
a good example.

The manager must isolate several pieces of information
before the decision can be made. One type of information to
be isolated is that which can be obtained from.the flock's
own production records: flock age and flock history are good
examples. If the flock is too old at the time of molting,
the increase in egg production and the increase in egg shell
quality may not be sufficient (or of sufficient duration)
for the recovery of costs incurred during the molt rest
period. The flock's history, the performance of the flock
during the first laying cycle, will be indicative of the
expected performance of the flock during subsequent laying
cycles. Thus, a flock which has been an average producer or
has experienced higher than normal daily mortality can'be
expected to continue in the same manner.

If the computer has been used throughout the flock
laying cycle, the manager should be able to tell (with no
additional calculations) the age of the flock and the
flock's past performance. In addition, the capability of

the computer (if the software to be used has been so

144

designed) to compare past performance to some standard
(strain, company, or based on the usual performance of
flocks housed in that particular building) allows the
manager to make a decision as to whether or not past
production trends indicate that the flock should be molted
and allowed to continue through another production cycle.

If trends indicate that the flock should be considered
for molting, then the computer should be used to make a
flock production simulation. The software used will have
been designed to utilize a number of production parameters
in order to project the expected production figures from the
flock for the period of time following the molt. These
production figures should include expected egg production
(including size breakdown), expected mortality, and expected
feed consumption. These figures will allow the manager to
assess the expected performance of the molted flock.

Costs and incomes must be projected, also, for the
molted flock. The expected price of eggs (by size), in
conjunction with the expected egg production figure (by
size) will give the manager an estimate of the total egg
receipts to be expected from the molted flock. In the same
way, summing'all of the expected costs will yield.a total
cost figure. By subtracting the total cost figure from a
summation of total egg receipts and any other receipts

associated with the molted flock, the manager arrives at a

145

net receipts figure which becomes the real measure of the
expected performance of the molted flock.

Even though molting the flock might significantly
increase the percent production figure or the egg shell
quality (and therefore, egg receipts), if the cost of
production from the molted flock increases so dramatically
that the increase in receipts is wiped out, the manager's
decision would probably be very different than if only the
change in production performance associated with molting was
considered. Here, the flock molting decision is based on
comparing expected performance of the melted flock to
expected costs and incomes associated with production.

To this point, the manager's use of the computer in
making the flock molting decision has been limited to
storing and manipulating information to arrive at a specific
net receipts figure. The computer has done nothing that the
manager could not do; given that the manager had the time, a
pencil, and a basic understanding of arithmetic. The
computer's real advantage in decision making comes from the
ability which it gives the manager to assess the performance
of the molted flock, given a set of key assumptions. By
changing one of these assumptions, by a measured amount each
time, the manager can arrive at the solution which yields
the greatest possible net receipts figure for the flock.

The alternative solution yielding the greatest net receipts

146

figure will be the one chosen as the correct alternative by
the manager.

Rahn (1977) used a computer model for strategic planning
for commercial laying flocks. Holding all other laying
flock production, cost, and price assumptions constant, the
number of molted lay cycles (from zero to two) and the
length of each cycle (from nine to fifteen for the pullet
lay cycle, either zero or from six to nine for the first
molt lay cycle, and either zero»or six for the second molt
lay cycle) was varied. The results of the simulations
showed the maximum average net revenue from the option which
consisted of only a pullet production cycle, whiCh was
fifteen periods long. If this were an actual flock molting
decision, this is the option which would be chosen by the
.floCk manager. N6te that this is the correct option, given
a set of unchanging production, cost, and income
assumptions. If any of these assumptions should Change, the
resultant decision might be very different.

The uses of the computer in making a flock molting
decision vary from storing and manipulating information, to
projecting figures based on parameters selected as true
estimates of future performance, to formulating a number of
alternative solutions based on slightly different
assumptions. These uses increase in complexity from the

manager deciding whether to consider molting, to the manager

147

deciding that molting could have a significant effect on net
receipts, to the manager deciding upon whiCh floCk molting
alternative is the correct one. In all of these cases, the
computer acts as a tool to present information to the

decision maker such that the correct decision can be made.

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