Linear Programming, Game Theory Models: Wald’s (Maximin) (Pessimistic) Criterion, Laplace Criterion, Hurwicz Criterion, Benefit Criterion and Wald’s (Maximax) (Optimistic) Criterion.
Exploratory Data Analysis, Feature Engineering, Data Visualization, Linear Programming, Operations Research, Game Theory Algorithms, Operations Analytics
Catfish is the most important species in the United States’ aquaculture industry, accounting for 21% of the entire industry with a total sale of $371 million and supporting 8,004 jobs per annum in 20162. In recent years, however, U.S catfish producers have faced tremendous difficulties due to poor harvests, flooding, high variable costs, and most eminently, foreign competition.
Given the economic significance and impact of catfish production, this report focuses on
(i) optimising time of sale and then
(ii) optimising the production under the identified selling months to maximise the producers’ profit.
Similar to producers in the agriculture industry, Catfish producers operate in a market with perfect competition characteristics. This implies that they are price takers with limited bargaining power that face fierce competitions and low profit margins. Henceforth, there are limited focus on increasing production yield and operational efficiency since such analysis will at most bring short-term gains.
Thus, two models are proposed in this project:
(i) Optimize producers’ selling time using Game Theory (Model 1)
(ii) Maximize profit by optimizing production through LP (Model 2)
In order to create the models, an in-depth study was done to discover the operations risks and variables associated with Catfish farming.
The dataset chosen contains catfish domestic sales and inventory in the U.S - both nationwide and within different states - from 1986 to 2013, according to the U.S Department of Agriculture Research Service. Based on observation of the dataset and business objective, the project was based on an an 8-year period from 2004 to 2012.
The findings in this paper enable U.S catfish producers to choose the criterion of Game Theory in line with their risk aptitude. The price of catfish ranges from US$0.7067/lb to US$0.8901/lb and the number of optimal selling months is capped at two months (refer to Section 5.1). Henceforth, the producers will be able to plan their production and negotiate with intermediaries for more optimal contractual prices in hope of achieving higher profit, which ranges from US$23,253.68 to US$39,780.48 (refer to Section 5.2).
The producers should update both models annually to develop their pricing strategies for each production cycle in order to maintain their bargaining power to negotiate better contractual terms with the intermediaries and plan their production cycle.
Hpone Myat Khine (@HponeMK)
Widya Salim (@salimwid)
Tian Shi Xin Sophil (@stiansx)
Cristian Peñate Bojacá (@crisbop21)
Mansi Agarwal (@contactmansi)
Donghwan Kim (@hwaneest)