A new cloud parcel model (CPM) including activation, condensation, collision-coalescence, and lateral entrainment processes is used to investigate aerosol-cloud interactions (ACIs) in cumulus development prior to rainfall onset. The CPM was applied with surface aerosol measurements to predict the vertical structure of cloud development at early stages, and the model results were evaluated against airborne observations of cloud microphysics and thermodynamic conditions collected during the Integrated Precipitation and Hydrology Experiment (IPHEx) in the inner region of the southern Appalachian Mountains (SAM). Sensitivity analysis was conducted to examine the model response to variations in key ACI physiochemical parameters and initial conditions. The CPM sensitivities mirror those found in parcel models without entrainment and collision-coalescence, except for the evolution of the droplet spectrum and liquid water content with height. Simulated cloud droplet number concentrations (CDNCs) exhibit high sensitivity to variations in the initial aerosol concentration at cloud base, but weak sensitivity to bulk aerosol hygroscopicity. The condensation coefficient a c plays a governing role in determining the evolution of CDNC, liquid water content (LWC), and cloud droplet spectra (CDS) in time and with height. Lower values of a c lead to higher CDNCs and broader CDS above cloud base, and higher maximum supersaturation near cloud base. Analysis of model simulations reveals that competitive interference among turbulent dispersion, activation, and droplet growth processes modulates spectral width and explains the emergence of bimodal CDS and CDNC heterogeneity in aircraft measurements from different cloud regions and at different heights. Parameterization of nonlinear interactions among entrainment, condensational growth, and collision-coalescence processes is therefore necessary to simulate the vertical structures of CDNCs and CDSs in convective clouds. Comparisons of model predictions with data suggest that the representation of lateral entrainment remains challenging due to the spatial heterogeneity of the convective boundary layer and the intricate 3-D circulations in mountainous regions.