This paper describes an approach to management decision problems using incomplete information. The approach is demonstrated taking the decision about the spacing to adopt in establishing a plantation as an example. Little critical information about the physical effects or the effects on costs of varying initial spacing is available in this country. It is shown that limits within which such effects probably lie, can be determined for the main quantities—the volume of timber produced, its quality, and the cost of production. If the objectives are known it is then possible to determine the treatment likely to give the best result. In the case of spacing it is found that the spacing giving the best financial results depends on the precise objective of the enterprise—expressed in this case by the discount rate, and on the prices to be obtained for the resulting produce, as well as on the volume and quality of the out-turn. It is shown that on a range of assumptions about physical outcome and price ranging from the most optimistic to the most pessimistic, and with rates of discount ranging from 31/2 to 61/2 per cent. on all except extreme combinations, a spacing of 8 feet will lead to a financial result within 5 per cent. of the best. On the expectations considered most likely to come about, spacing of 8 feet gives the best financial result. Only on the most pessimistic assumptions of price and volume production is the additional expenditure necessary to achieve spacings closer than 8 feet expected to earn a rate of return greater than 5 per cent.
Copyright (C) 1967, Institute of Chartered Foresters
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