IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v314y2022i2d10.1007_s10479-020-03646-0.html
   My bibliography  Save this article

Optimizing pig marketing decisions under price fluctuations

Author

Listed:
  • Reza Pourmoayed

    (Aarhus University)

  • Lars Relund Nielsen

    (Aarhus University)

Abstract

In the manufacturing of fattening pigs, pig marketing refers to a sequence of culling decisions until the production unit is empty. The profit of a production unit is highly dependent on the price of pork, the cost of feeding and the cost of buying piglets. Price fluctuations in the market consequently influence the profit, and the optimal marketing decisions may change under different price conditions. Most studies have considered pig marketing under constant price conditions. However, because price fluctuations have an influence on profit and optimal marketing decisions it is relevant to consider pig marketing under price fluctuations. In this paper we formulate a hierarchical Markov decision process with two levels which model sequential marketing decisions under price fluctuations in a pig pen. The state of the system is based on information about pork, piglet and feed prices. Moreover, the information is updated using a Bayesian approach and embedded into the hierarchical Markov decision process. The optimal policy is analyzed under different patterns of price fluctuations. We also assess the value of including price information into the model.

Suggested Citation

  • Reza Pourmoayed & Lars Relund Nielsen, 2022. "Optimizing pig marketing decisions under price fluctuations," Annals of Operations Research, Springer, vol. 314(2), pages 617-644, July.
    • Handle: RePEc:spr:annopr:v:314:y:2022:i:2:d:10.1007_s10479-020-03646-0
    DOI: 10.1007/s10479-020-03646-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-020-03646-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-020-03646-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jean-Paul Chavas & James Kliebenstein & Thomas D. Crenshaw, 1985. "Modeling Dynamic Agricultural Production Response: The Case of Swine Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 636-646.
    2. Durbin, James & Koopman, Siem Jan, 2012. "Time Series Analysis by State Space Methods," OUP Catalogue, Oxford University Press, edition 2, number 9780199641178.
    3. Anders Kristensen & Erik Jørgensen, 2000. "Multi‐level hierarchic Markov processes as a framework for herd management support," Annals of Operations Research, Springer, vol. 94(1), pages 69-89, January.
    4. Kathryn A. Boys & Ning Li & Paul V. Preckel & Allan P. Schinckel & Kenneth A. Foster, 2007. "Economic Replacement of a Heterogeneous Herd," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 24-35.
    5. Pourmoayed, Reza & Nielsen, Lars Relund & Kristensen, Anders Ringgaard, 2016. "A hierarchical Markov decision process modeling feeding and marketing decisions of growing pigs," European Journal of Operational Research, Elsevier, vol. 250(3), pages 925-938.
    6. Nielsen, Lars Relund & Kristensen, Anders Ringgaard, 2006. "Finding the K best policies in a finite-horizon Markov decision process," European Journal of Operational Research, Elsevier, vol. 175(2), pages 1164-1179, December.
    7. Roemen, J.H.J. & de Klein, S.J., 1999. "An optimal marketing strategy for porkers with differences in growth rates and dependent prices," Other publications TiSEM 0a7dca18-72e9-4e53-b811-a, Tilburg University, School of Economics and Management.
    8. Roemen, J.H.J. & de Klein, S.J., 1999. "An optimal marketing strategy for porkers with differences in growth rates and dependent prices," Research Memorandum 781, Tilburg University, School of Economics and Management.
    9. Toft, Nils & Kristensen, Anders R. & Jorgensen, Erik, 2005. "A framework for decision support related to infectious diseases in slaughter pig fattening units," Agricultural Systems, Elsevier, vol. 85(2), pages 120-137, August.
    10. Jeffrey Ohlmann & Philip Jones, 2011. "An integer programming model for optimal pork marketing," Annals of Operations Research, Springer, vol. 190(1), pages 271-287, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pourmoayed, Reza & Nielsen, Lars Relund & Kristensen, Anders Ringgaard, 2016. "A hierarchical Markov decision process modeling feeding and marketing decisions of growing pigs," European Journal of Operational Research, Elsevier, vol. 250(3), pages 925-938.
    2. Pourmoayed, Reza & Nielsen, Lars Relund, 2019. "An approximate dynamic programming approach for sequential pig marketing decisions at herd level," European Journal of Operational Research, Elsevier, vol. 276(3), pages 1056-1070.
    3. Sara Rodríguez & Lluis Plà & Javier Faulin, 2014. "New opportunities in operations research to improve pork supply chain efficiency," Annals of Operations Research, Springer, vol. 219(1), pages 5-23, August.
    4. Lars Relund Nielsen & Erik Jørgensen & Søren Højsgaard, 2011. "Embedding a state space model into a Markov decision process," Annals of Operations Research, Springer, vol. 190(1), pages 289-309, October.
    5. Esteve Nadal-Roig & Adela Pagès-Bernaus & Lluís M. Plà-Aragonès, 2018. "Bi-Objective Optimization Model Based on Profit and CO 2 Emissions for Pig Deliveries to the Abattoir," Sustainability, MDPI, vol. 10(6), pages 1-13, May.
    6. Jeffrey Ohlmann & Philip Jones, 2011. "An integer programming model for optimal pork marketing," Annals of Operations Research, Springer, vol. 190(1), pages 271-287, October.
    7. Leen, Frederik & Van den Broeke, Alice & Aluwé, Marijke & Ludwig, Lauwers & Sam, Millet & Jef, Van Meensel, 2017. "Simulation Modelling To Provide Insights Into The Optimization Of Delivery Weights Of Finisher Pigs," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261272, European Association of Agricultural Economists.
    8. Lan Ge & Anders Kristensen & Monique Mourits & Ruud Huirne, 2014. "A new decision support framework for managing foot-and-mouth disease epidemics," Annals of Operations Research, Springer, vol. 219(1), pages 49-62, August.
    9. Leen, Frederik & Van den Broeke, Alice & Aluwé, Marijke & Lauwers, Ludwig & Millet, Sam & Van Meensel, Jef, 2018. "Stakeholder-driven modelling the impact of animal profile and market conditions on optimal delivery weight in growing-finishing pig production," Agricultural Systems, Elsevier, vol. 162(C), pages 34-45.
    10. Avanzi, Benjamin & Taylor, Greg & Vu, Phuong Anh & Wong, Bernard, 2020. "A multivariate evolutionary generalised linear model framework with adaptive estimation for claims reserving," Insurance: Mathematics and Economics, Elsevier, vol. 93(C), pages 50-71.
    11. François R. Velde, 2009. "Chronicle of a Deflation Unforetold," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 591-634, August.
    12. Wen Xu, 2016. "Estimation of Dynamic Panel Data Models with Stochastic Volatility Using Particle Filters," Econometrics, MDPI, vol. 4(4), pages 1-13, October.
    13. Alejandro Rodriguez & Esther Ruiz, 2009. "Bootstrap prediction intervals in state–space models," Journal of Time Series Analysis, Wiley Blackwell, vol. 30(2), pages 167-178, March.
    14. Parrini, Alessandro, 2013. "Importance Sampling for Portfolio Credit Risk in Factor Copula Models," MPRA Paper 103745, University Library of Munich, Germany.
    15. Salman Huseynov, 2021. "Long and short memory in dynamic term structure models," CREATES Research Papers 2021-15, Department of Economics and Business Economics, Aarhus University.
    16. Tsionas, Mike G., 2021. "Bayesian forecasting with the structural damped trend model," International Journal of Production Economics, Elsevier, vol. 234(C).
    17. Tommaso Proietti, 2002. "Some Reflections on Trend-Cycle Decompositions with Correlated Components," Econometrics 0209002, University Library of Munich, Germany.
    18. Tobias Hartl & Roland Jucknewitz, 2022. "Approximate state space modelling of unobserved fractional components," Econometric Reviews, Taylor & Francis Journals, vol. 41(1), pages 75-98, January.
    19. Broto Carmen & Ruiz Esther, 2009. "Testing for Conditional Heteroscedasticity in the Components of Inflation," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 13(2), pages 1-30, May.
    20. Marczak, Martyna & Proietti, Tommaso, 2016. "Outlier detection in structural time series models: The indicator saturation approach," International Journal of Forecasting, Elsevier, vol. 32(1), pages 180-202.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:314:y:2022:i:2:d:10.1007_s10479-020-03646-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.