RISK MANAGEMENT IN HERD SIRE PORTFOLIO SELECTION - A COMPARISON OF ROUNDED QUADRATIC AND SEPARABLE CONVEX-PROGRAMMING

Quadratic programming, which does not guarantee integer solutions, may be used to consider risk when herd sires are selected. Because semen cannot be purchased in partial units, two alternatives were investigat ed: separable convex programming (a linear approximation of quadratic programming) and rounded quadratic programming. Expected net revenue a nd its variance were calculated for 383 Holstein bulls. Expected net r evenue was based on semen price; PTA dollars for milk, fat, and protei n; and three linear type traits: foot angle, udder depth, and teat pla cement. Maximization of utility (expected net revenue less its varianc e times a risk aversion factor) was subject to constraints: lots of 5 units, maximum average price per lot, minimum number of lots from bull s that transmit calving ease, and minimum number of different sires of selected bulls. Multiple formulations for expected net revenue, const raint combinations, and risk aversion factors were used. Twenty-two of 60 pairs of sire portfolios from rounded quadratic and separable conv ex programming were identical. Semen price per lot and lots from bulls that transmit calving ease were influential constraints. At the two l owest amounts of risk aversion examined, results supported common reco mmendations of selection of three to seven herd sires, regardless of h erd size.