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The decisions and choices about combining different enterprises for optimal utilization of resources include;
1. Production and organisation problem decisions.
A farmer must make decisions on certain fundamental questions or problems regarding production of enterprises and organisation of the farm business. These questions involve;
land resources; what to produce and how to produce. The farmer must decide what scale of his farming operations will be and how to equip the farm business. Such decisions can be further categorized into:
Strategic decision: Includes deciding the best size of the farm/firm. This depends on a number of factors such as intensity of land use, managerial ability of the farmer, level of technology/mechanisation of farm, types of business, type of farming area , water availability among others.
Operation decisions: Continuously made in day-to-day operations of the farm business and they include; selection of the farm enterprise (what to produce); product mix/enterprise mix and resource use (how much and what range to produce); how to produce that is the selection of least cost or efficient method of production; when to produce that is the timing.
2. Administrative problem decisions
These are decisions relating how to use the time and how to do things/operations correctly. Decision on sources of finance, decisions on how to finance the business and utilization of funds, decisions on supervision of work, decisions on accounting and book keeping among others.
3. Marketing problem decisions
This involves the buying and selling decisions.
Buying decisions; relate to buying/ purchase of farm inputs for example equipments, fertilizers, and seeds from suppliers; decision on whom to acquire from, how much inputs to acquire, what to buy, when to buy and where to buy.
Selling decisions; decisions in relation to selling farm produces, decision of what to sell, when to sell, where/which market to sell in.
Dullayo answered the question on May 13, 2018 at 11:35
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