A Model of Optimal Level of Grain Backup Reserve and the Estimation of China

摘要

In order to ensure food supply,a country needs to establish its grain backup reserve.There is an optimal level of grain backup reserve:If the level of grain backup reserve is too high,there would be a high chance for the reserved grain not to be consumed after the first harvest season of next year.The cost associated with storage of the unconsumed reserve is called the cost of overage.If the level of grain backup reserve is too low,there would be a high chance of food shortage,and a purchase from the international market will be needed to cover the shortage.The grain price in the international market would be higher.The extra payment due to the higher grain price in the international market is called the cost of underage.The level of grain consumption is fluctuated,and could be considered as a random variable with normal distribution.Given the level of grain backup reserve,there are certain probabilities for over-reservation and under-reservation of the grain backup reserve.The optimal level of grain backup reserve is to minimize the sum of the expected cost of overage and the expected cost of underage.Based on this idea a model of estimating the optimal level of grain backup reserve is developed,and the optimal level of grain backup reserve of China is estimated.