The Optimal Season Length for a Sugar Mill in the Australian Sugar Industry

In this paper we present a model of the optimal crushing season length for sugar cane. The approach taken is to view the optimal season length problem as an optimal stopping problem for both the Mill and a representative grower. We formulate the optimal stopping problems for both Mill and grower based on \real option" theory using Ito calculus. Because the interests of the Mill and growers do not coincide this results in a stochastic differential game of optimal stopping. We solve the model numerically using a finite difference algorithm.