The Palisade Academic
Modeling the Potential Impact of a 
Carbon Tax on Australian Farmers, with @RISK

At University of Melbourne, Modeling the Potential Impact of a Carbon Tax on Australian Farmers, with @RISK
Agricultural scientist Dr. Şeyda Özkan used @RISK to examine how a carbon tax would financially impact dairy farmers in Australia that employ two different feeding systems: a traditional ryegrass pasture-based system, and a complementary forage-based system. By simulating the reduction in farm operating profits in the face of the carbon tax, Dr. Özkan was able to show that the complementary forage-based system had higher operating profits than the ryegrass pasture system, but posed greater risks. The study gives valuable insight to the complex impacts a nation-wide carbon-mitigation policy would have on the Australian dairy industry.

”In general, the complimentary forage-based system promised higher operating profits for the same level of risk or the same net benefit for a lower level of risk than the traditional pasture-based system," says Dr. Özkan, currently a researcher with the Department of Animal and Aquacultural Sciences at Norwegian University (but studying at the Department of Agriculture and Food Systems at the University of Melbourne, Australia, at the time). “However if farmers are risk-averse, strategies with relatively low variance of income (and sometimes even at the cost of some reduction in expected outcome) may be favored over strategies with a high variance of income in general. The attitude towards risk varies among farmers, and therefore the ‘best choice’ for an individual farm is subjective… The ultimate implication of the risk analysis in this study was to justify that the uncertainties should be taken into account when making management-related decisions.”

”One of the advantages of the @RISK software is that it can iterate thousands of scenarios in just seconds, depending on the complexity of the model and the number of parameters examined,” says Dr. Özkan. Her favorite features of the software include distribution fitting ”for saving time and energy to find the best distribution," and the probability distribution functions ”for easily determining which of the two options dominates the other.”

» Read more about the study here

Licensing Options

There are three easy ways to get the DecisionTools Suite for your students:

Course Licenses available from Palisade. These are economical, annually renewing bulk licenses for both
network lab and laptop installation.
» Learn more

Student Versions from Palisade. These are 12-month versions available for purchase individually by students through either the Palisade web site or the school store.
» Learn more

Textbook Editions available bundled with textbooks.
These are time- and model-limited licenses.
» Learn more

Get DecisionTools Suite 7 for your course by contacting:

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Teaching Tips & Examples

The Newsperson Problem

Excerpted from Financial Models using Simulation and Optimization by Wayne Winston, published by Palisade Corporation

This is a great introduction to @RISK that demonstrates how it is used to model situations where we make decisions under uncertainty. In this example Wayne Winston walks you through how to determine how many calendars to order while also finding the confidence interval for the expected profit.

» Download the example file and step-by-step instructions
» Learn more about @RISK

Tech Tip of the Month

Specifying Distributions in Terms of Percentiles 

Is there a way to specify distributions in terms of percentiles rather than with the usual parameters?

A: For many distributions, you can specify distributions in terms of percentiles by utilizing the "Alternate Parameters" option. In the Define Distributions dialog, select the Alt. Parameters tab, and you'll see the distributions that can be specified in terms of percentiles. Double-click your desired distribution to select it.

A dialog will open with some suggested percentiles, and you can change the values in that dialog as usual. But quite possibly you'll want to specify different percentiles from the suggested ones — for example, the 10th and 90th instead of the 5th and 95th. To change which percentiles are used, click the drop-down arrow at the right of the word Alternate to open the Parameters dialog. If you open the Parameters dialog, you can change which percentiles are used, and by selecting the radio buttons you can even define the distribution based on a mix of percentiles and standard parameters.

» View the full Knowledge Base Article
» Learn more about @RISK

Featured White Paper

Modeling Removal of Risk Assessment Questions in the USA Predicts an Increase in Risk of HIV Exposure in Blood Recipients
by Yang, H., et al. "Modeling complete removal of risk assessment questions in the USA predicts the risk of HIV exposure in blood recipients could increase despite the use of nucleic acid testing." Vox sanguinis (2016).

In the absence of effective individual risk-based screening or donor self-selection, the model predicts that in the United States, an additional 39 (95% CI 35–43) HIV-infected units would escape detection by nucleic acid testing, potentially capable of exposing approximately 68 (95% CI 61–75) individuals to the risk of HIV infection through the administration of prepared blood components. Despite some inherent uncertainty, the worst-case scenario of completely ineffective individual risk assessment, absence of donor self-selection and increased reliance on NAT for blood screening is estimated to be associated with an approximately fourfold increase in the risk of HIV exposure through transfusion in the United States. The model used @RISK to generate Monte Carlo simulations that incorporated uncertainty of the input data into the model estimates.

Palisade Corporation  Read the paper here

Palisade Corporation

The Academic Global Leader in
Risk and Decision Analysis
Palisade Corporation is the world's leading provider of risk and decision analysis software and solutions. Founded in 1984, its products @RISK and the DecisionTools Suite are used by over 95% of the Fortune 100, in nearly every industry around the world. Palisade is headquartered in New York State, and has offices in London, Sydney, Rio de Janeiro, and Tokyo.

What is The DecisionTools Suite?
The DecisionTools Suite is the world’s only integrated set of risk and decision analysis programs. The Suite includes @RISK for Monte Carlo simulation, BigPicture for mind mapping and data exploration, PrecisionTree for decision trees, and TopRank for “what if” sensitivity analysis. In addition, DecisionTools Suite comes with StatTools for statistical analysis and forecasting, NeuralTools for predictive neural networks, and Evolver and RISKOptimizer for optimization. All programs work together seamlessly, and all integrate completely with Microsoft Excel for ease of use and maximum flexibility.

The Suite is offered in three affordable and flexible licensing options for those in academia: Student Versions, Course Licenses and Full Academic Versions.

» Schools using Palisade software
Textbooks using Palisade software

In This Issue

» Modeling the Potential
   Impact of a Carbon
   Tax on Australian
   Farmers, with @RISK

» Licensing Options

» Teaching Tips &

   The Newsperson Problem

» Tech Tip
   Specifying Distributions
   in Terms of Percentiles

» Featured White Paper
   Risk of HIV Exposure
   in Blood Recipients

» About Palisade and the
   DecisionTools Suite

Keep in Touch
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