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Added-Value Utility Formulation in Palm Oil Supply Chain Based on Risk, Investment and Technology

Received: 6 October 2014     Accepted: 16 October 2014     Published: 11 December 2014
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Abstract

In palm oil supply chain (POSC) the operational risk, investment and technology levels between the actors may not be proportionately rewarded by the same levels of added value. Each actor will attempt to obtain the highest reward. However, each actor must consider the level of added-value obtained by other actors so as to maintain the fair balance in the overall supply chain profitability. Otherwise any of the least profitable actor will withdraw itself from the supply chain and the supply chain will collapse. In this study the authors proposed a formula to calculate the utility function based added-value for each of the actors in the POSC. The utility function is a formula based on the risk, investment and technology levels of each of the POSC actors. Permutation of the three factors was used while seeking their combination that give the highest utility function added-value. To optimize the added-value distribution between the agents the concept of stakeholder dialogue was used. This research is important because the developed models offer a workable algorithm to seek optimum weight level of underlying factors while calculating utility added-value that satisfy the POSC as a whole. Agent-based modeling approach was used for this purpose to facilitate the negotiation between all actors to reach the balanced added-values. Netlogo software was used in developing the models. The proposed utility function model provided the means to find the weight values, while the optimization model proved to be practical to calculate the expected negotiated prices between all the actors. Application of the models to other types of commodity and different supply chain model will need some adjustments in the calculation.

Published in International Journal of Business and Economics Research (Volume 3, Issue 6-1)

This article belongs to the Special Issue Supply Chain Management: Its Theory and Applications

DOI 10.11648/j.ijber.s.2014030601.19
Page(s) 57-64
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Added-Value, Palm Oil Supply Chain, Permutation, Agent Based Modeling, Netlogo Software

References
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[2] J.G.A.J. Van der Vorst, “Supply Chain Management: Theory and Practices. The Emerging World of Chains & Networks”, Elsevier, Hoofdstuk 2.1. Wageningen. 2004F. Bunte, “Pricing and Performance in Agri-Food Supply Chains First Edition”; 37-45. LEI, Wageningen University and Research Centre. Wageningen. 2006.
[3] A.M. Janvier-James, “A New Introduction to Supply Chains and Supply Chain Management: Definitions and Theories Perspective”. International Business Research Journal. 5(1), pp. 194-207. 2012.
[4] J.H. Trienekens, “Agricultural Value Chains in Developing Countries ; A Framework for Analysis”. Journal of International Food and Agribusiness Management Review. 14(2), pp. 51-82. 2011.
[5] [PKPN] Pusat Kebijakan Pendapatan Negara, “Kebijakan Restrukturisasi Tarif Bea Keluar Atas Kelapa Sawit, Minyak Sawit dan Produk Turunannya”. Badan Kebijakan Fiskal, Kementerian Keuangan. Jakarta. 2011.
[6] [CAO] Compliance Advisor / Ombudsman. “LAPORAN AUDIT Audit CAO atas IFC. C-I-R6-Y08-F096”. International Finance Corporation (IFC). Multilateral Investment Guarantee Agency (MIGA). Anggota Grup Bank Dunia. 2009.
[7] A. Mulyana, “Penetapan Harga Tandan Buah Segar Kelapa Sawit di Sumatera Selatan Dari Perspektif Pasar Monopoli Bilateral”. Jurusan Sosial Ekonomi PertanianFakultas Pertanian dan Program Pascasarjana Universitas Sriwijaya. Palembang. 2004.
[8] D. Coltrain, D. Barton, M. Boland, “Value Added: Opportunities And Strategies. Arthur Capper Cooperative Center”. Department of Agricultural Economics. Kansas State University. Kansas City. 2000.
[9] T. Hines, “Supply Chain Strategies: Customer-driven and Customer-Focused”. Great Britain. Elsevier Butterworth. Heinemann. 2004.
[10] E. Harjanto, “Manajemen Produksi dan Operasi Edisi 2”. BPFE. Yogyakarta. 1999.
[11] W. Li, and Z. Yuanyuan, “A Game Analysis on Profit Distribution of Two-echelon Supply Chain with Principal and Subordinate”. School of Economics and Management, Jiangsu University of Science & Technology. Jiangsu. 2005.
[12] Bunte, F. “Pricing And Performance In Agri-Food Supply Chains First Edition”; 37-45. LEI, Wageningen University and Research Centre. Wageningen. 2006.
[13] D. Salvatore, “Managerial Economics in a Global Economy with Economic Applications Card”, 5th edition. South-Western. ISBN/ISSN :0-324-17187-0. Copenhagen. 2004.
[14] A.K. Goel, S.L. Gupta, S. Srinivasan, and B.K. Bha, “Integration of Supply Chain Management Using Multiagent System & Negotiation Model”. International Journal of Computer and Electrical Engineering, 3(3), pp 375-378. 2011.
[15] T.S. Atkin, and L.M. Rinehart, “Effect of Negotiation Practices on Suppliers and Customers”. Negotiation Journal January 2006. pp 47-65. 2006
[16] B. Palazzo, “An Introduction to Stakeholder Dialogue, Responsible Business” How to manage a CSR strategy successfully. John Wiley and Son; 17-42. Oxford. 2010.
[17] T. Juster, “Rethinking Utility Theory”. The Journal of Behavioral Economics, JAI Press Inc., vol. 19, Number 2, pp. 155-179, 1990.
[18] S. Hidayat, Marimin, A. Suryani, Sukardi, and M. Yani, “Model Penyeimbangan Nilai Tambah Berdasarkan Tingkat Risiko Pada Rantai Pasok Minyak Sawit”. PhD Thesis, Bogor Agricultural University (IPB). 2012.
[19] Suharjito, “Pemodelan Sistem Pendukung Pengambilan Keputusan Cerdas Manajemen Risiko Rantai Pasok Produksi/Komoditi Jagung”. PhD Thesis, Bogor Agricultural University (IPB). 2011.
[20] S. Awal, “Strategi Penyediaan Karbohidrat Bersumber dari Ubi Kayu”. PhD Thesis . Bogor Agricultural University (IPB). 2012.
[21] M. Wooldridge, and N.R. Jennings, “Intelligent agents : theory and practice”. Knowledge Engineering Review 10. London. 1995
[22] S. Tisue, and U. Wilenski, “NetLogo: Design and Implementation of a Multi-Agent Modeling Environment”. Center for Connected Learning and Computer-Based Modeling Northwestern University, Evanston, Illinois. 2006.
Cite This Article
  • APA Style

    Syarif Hidayat, Nunung Nurhasanah. (2014). Added-Value Utility Formulation in Palm Oil Supply Chain Based on Risk, Investment and Technology. International Journal of Business and Economics Research, 3(6-1), 57-64. https://doi.org/10.11648/j.ijber.s.2014030601.19

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    ACS Style

    Syarif Hidayat; Nunung Nurhasanah. Added-Value Utility Formulation in Palm Oil Supply Chain Based on Risk, Investment and Technology. Int. J. Bus. Econ. Res. 2014, 3(6-1), 57-64. doi: 10.11648/j.ijber.s.2014030601.19

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    AMA Style

    Syarif Hidayat, Nunung Nurhasanah. Added-Value Utility Formulation in Palm Oil Supply Chain Based on Risk, Investment and Technology. Int J Bus Econ Res. 2014;3(6-1):57-64. doi: 10.11648/j.ijber.s.2014030601.19

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  • @article{10.11648/j.ijber.s.2014030601.19,
      author = {Syarif Hidayat and Nunung Nurhasanah},
      title = {Added-Value Utility Formulation in Palm Oil Supply Chain Based on Risk, Investment and Technology},
      journal = {International Journal of Business and Economics Research},
      volume = {3},
      number = {6-1},
      pages = {57-64},
      doi = {10.11648/j.ijber.s.2014030601.19},
      url = {https://doi.org/10.11648/j.ijber.s.2014030601.19},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.s.2014030601.19},
      abstract = {In palm oil supply chain (POSC) the operational risk, investment and technology levels between the actors may not be proportionately rewarded by the same levels of added value. Each actor will attempt to obtain the highest reward. However, each actor must consider the level of added-value obtained by other actors so as to maintain the fair balance in the overall supply chain profitability. Otherwise any of the least profitable actor will withdraw itself from the supply chain and the supply chain will collapse. In this study the authors proposed a formula to calculate the utility function based added-value for each of the actors in the POSC. The utility function is a formula based on the risk, investment and technology levels of each of the POSC actors. Permutation of the three factors was used while seeking their combination that give the highest utility function added-value. To optimize the added-value distribution between the agents the concept of stakeholder dialogue was used. This research is important because the developed models offer a workable algorithm to seek optimum weight level of underlying factors while calculating utility added-value that satisfy the POSC as a whole. Agent-based modeling approach was used for this purpose to facilitate the negotiation between all actors to reach the balanced added-values. Netlogo software was used in developing the models. The proposed utility function model provided the means to find the weight values, while the optimization model  proved to be practical to calculate the expected negotiated prices between all the actors. Application of the models to other types of commodity and different supply chain model will need some adjustments in the calculation.},
     year = {2014}
    }
    

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  • TY  - JOUR
    T1  - Added-Value Utility Formulation in Palm Oil Supply Chain Based on Risk, Investment and Technology
    AU  - Syarif Hidayat
    AU  - Nunung Nurhasanah
    Y1  - 2014/12/11
    PY  - 2014
    N1  - https://doi.org/10.11648/j.ijber.s.2014030601.19
    DO  - 10.11648/j.ijber.s.2014030601.19
    T2  - International Journal of Business and Economics Research
    JF  - International Journal of Business and Economics Research
    JO  - International Journal of Business and Economics Research
    SP  - 57
    EP  - 64
    PB  - Science Publishing Group
    SN  - 2328-756X
    UR  - https://doi.org/10.11648/j.ijber.s.2014030601.19
    AB  - In palm oil supply chain (POSC) the operational risk, investment and technology levels between the actors may not be proportionately rewarded by the same levels of added value. Each actor will attempt to obtain the highest reward. However, each actor must consider the level of added-value obtained by other actors so as to maintain the fair balance in the overall supply chain profitability. Otherwise any of the least profitable actor will withdraw itself from the supply chain and the supply chain will collapse. In this study the authors proposed a formula to calculate the utility function based added-value for each of the actors in the POSC. The utility function is a formula based on the risk, investment and technology levels of each of the POSC actors. Permutation of the three factors was used while seeking their combination that give the highest utility function added-value. To optimize the added-value distribution between the agents the concept of stakeholder dialogue was used. This research is important because the developed models offer a workable algorithm to seek optimum weight level of underlying factors while calculating utility added-value that satisfy the POSC as a whole. Agent-based modeling approach was used for this purpose to facilitate the negotiation between all actors to reach the balanced added-values. Netlogo software was used in developing the models. The proposed utility function model provided the means to find the weight values, while the optimization model  proved to be practical to calculate the expected negotiated prices between all the actors. Application of the models to other types of commodity and different supply chain model will need some adjustments in the calculation.
    VL  - 3
    IS  - 6-1
    ER  - 

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Author Information
  • Industrial Engineering Department, The University Al Azhar Indonesia, Jakarta, Indonesia

  • Industrial Engineering Department, The University Al Azhar Indonesia, Jakarta, Indonesia

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