ANALYSIS OF RISKS IN DAIRY SUPPLY CHAIN: AN AGENT BASED MODELLING APPROACH

• Main Author: RIVIANDA DAUD - Nim: 39012006 , ANDRE
• Format: Dissertations
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/25538
• Institution: Institut Teknologi Bandung

<p align="justify">Agribusiness is a risky business. It is characterized by two most important characteristics, which are its nature of production processes and its business environment. The main product is mostly biological raw materials that are usually perishable, variable in quality, and not regularly available throughout the year. The biological process and the seasonality of production impose constraints for all actors and activities along agricultural production chain. The production process also depends on climatic events over which business actors may have little control. Agribusiness comprises a set of collective entities that performed wide range of activities in the form of supply chain. However, the understanding on risk and its management in this context is very still limited. Thus, this research have addressed this issues by examining the way of those entities perceive, define and manage risks in context of supply chain. A qualitative model to explain particular issues have also been successfully developed. This research employed agent based methodology as the main approach to address risks in agriculture which considered as complex phenomena. It provided a method to address the problems that concern emergence-complexity, which is a dynamic that arises from how the systems interact with each other and respond to each other and their environment. The use of agent based model to understand individuals and the whole system of agriculture is relatively novel in agribusiness research, especially in risk subject, Therefore, the use of ABM in this study have contributed methodologically to the agricultural business discipline. Empirical studies on certain dairy supply chain in West Java - Indonesia have also completed to support the use of main approach. This work employed Principal Component Analysis to reveal various source of risk in dairy supply chain and Expected Utility Approach to understand farmers’ attitude toward risks. In the dairy supply chain understudy, this research found at least 30 variables considered as a sources of risk which can be compounded into several categories which are natural risk, biological risk, operational risk, household related risk, resources endowment related risk, and market risk. It has been confirmed that those variables could explain most of variation occurred in dairy farming. It is also found that most of dairy farmers, as the main actors in dairy supply chain, exhibit aversion type of risk preference, while it is also found farmers with risk neutral and risk takers type. This could explain the most of variation for farmers in choosing strategies on dairy risk management. There were only two factors that have been identified as farmers’ main risk coping strategies according to their preference which was financial-related strategy and improving farming practice strategy. This research has successfully develop an agent based model to be used as a tool to describe and understand a dairy supply chain which exhibit a complex system. As a system is a set of elements whose interconnections determine their <br /> <br /> <br /> behavior and the behavior of the entire system, this model has been proven in its capability to explain the behavior of each element in the system, and also reveal their role in affecting system behavior through simulation. The most important finding is about the leverage point in the dairy supply chain risks system. As leverage points are places within a complex system where a certain intervention in one element can generate significant changes in the whole system, this research confirms forage production as leverage point for the whole dairy supply chain system. This implies that actors that involve in the supply chain should focus on forage-related aspect when it arrives on planning or designing risk management instrument for this particular supply chain. Thus, this brings clarity for all chain stakeholder in the decision making process.<p align="justify">