Purdue Agribusiness Management Simulation

The Purdue Agribusiness Management Simulation is computer software that can be used, along with the textbook, to enable students to apply management principles in a dynamic setting. This is accomplished by assigning students to 4-person teams that manage a farm supply retail store during a 6-quarter simulation period.  They apply principles by making decisions affecting specific business areas for each of  six quarters.  In the simulation, from two to six farm supply stores compete with one another in a rural market.

The farm supply store sells four products: complete feed, concentrate feed, commercial grade fertilizer, and custom blended fertilizer.  A history of feed and fertilizer sales for the most recent three-year period is provided. Students assume these sales represent their sales history.  Future sales will be affected by normal growth or contraction in the market as a whole; however, such growth or contraction will be subject to random fluctuations in livestock raised and type and acreage of crops grown.

In addition to changes in sales resulting from the state of overall agricultural production, sales will be changed by decisions made by students.  For example, if prices are raised relative to the prices of competitors, sales (and market share) will decline. The store management team has complete authority to adopt whatever policies it considers necessary.  Each management team is identified with a store number and name and will start on an equal basis in terms of assets, liabilities, owner’s equity, inventories, etc.

Simulation reports provided in the manual present the financial results for the previous management team during their last quarter of management, which then become the initial financial reports for the new management team. Results for all decisions are returned to students after each decision is run and include four reports discussed below.

The first report is the income statement, which reports sales, gross margin, and operating expense data for the current quarter on a total dollars, dollars/ton, and a percent of sales basis.  The last column of the income statement illustrates the results for the previous 12 months.  The second report provides the balance sheet, some key financial ratios, data on sales in tons, unfilled orders, and inventory.  In addition, information on the utilization of storage facilities, trucks, and labor is  reported.  The third report is a cash flow statement, which shows the amount of cash generated over the quarter and how cash was used during the quarter.  It  also reports how much cash is available to invest or pay down loans.  The fourth report is a market share report.  This report shows what other teams were charging for their products and outlines price limits for the next quarter.  Prices must be within the range shown by the price limits. Data on advertising outlays, sales by product line (tons), and market share by product line are also reported.

Additional information on the simulation is provided in the users manual.

  Simulation Manual

The simulation is available for purchase from Purdue University using the following link: https://mdc.itap.purdue.edu/subcategory.asp?subCatID=242&CatID=9