Simulating Dairy Herd Structure and Cash Flow: Design and Application of a Web-Based Decision Support Tool

Dairy herd decisions about replacement, herd size, reproduction and capital investments have long-lasting consequences for herd structure and farm cash flow. Yet most planning tools emphasize static budgets rather than the dynamic evolution of animal numbers and cash availability. The Dairy Herd Structure Simulation and Cash Flow tool is a web-based decision support system, available through the Dairy Management Decision Support Tools website, designed to simulate these dynamics under alternative management strategies. The model operates in monthly time steps using a Markov-chain framework in which transition probabilities among animal states are driven by user-specified parameters such as culling, reproduction and heifer management. Calves, heifers and cows are tracked by age and lactation group, and starting conditions can be entered as herd-level summaries or via individual-animal spreadsheets. Economic components include milk income, variable costs, cull-cow income, heifer purchases or sales, miscellaneous costs and loan amortization. For each scenario, the tool projects monthly cash flow and income over variable cost per cow, together with graphical summaries of herd structure. An example application compares a baseline steady-state herd with a heifers-driven herd growth scenario, illustrating how replacement strategies influence herd composition and net cash flow, supporting more informed dairy herd planning and risk management.