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SCENARIOS CONCEPTUAL TO MAINTAIN

CHICKEN EGGS PRICE STABLE WITH SYSTEM
DYNAMICS APPROACH

Conference Paper September 2014

DOI: 10.13140/RG.2.1.2278.8721

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 ISBN: 978-602-9372-70-0

ARTICLES OF BALI INTERNATIONAL SEMINAR ON SCIENCE AND TECHNOLOGY (BISSTECH) II 2014

Fundamental and Applied Research for Industrial Sustainability: Food, Agrochemical, and Information and
Communication Technology (ICT)
September 2-4, 2014, BALI-INDONESIA

SCENARIOS CONCEPTUAL TO MAINTAIN CHICKEN EGGS PRICE

STABLE WITH SYSTEM DYNAMICS APPROACH
Agung Brastama Putra, S.Kom, M.Kom 1, Siti Mukaromah, S.Kom 2
Information System Department, Faculty of Industrial Technology, UPN Veteran Jawa Timur, Surabaya
agungTama@aol.com1, siti.mukaromah4@yahoo.com2

Abstract

Sembako is nine essential commodities needed by society society according to the Decree of the Minister of
Industry and Trade No. 115/MPP/KEP/2/1998 dated February 27, 1998. With this designation, the government
should continue to maintain a stock of sembako. In this study, basic food items studied were chicken eggs with a
case study in East Java. East Java is the area of highest population of broiler chickens in Indonesia so that this
commodity has a bright future in East Java and to be supplied in other areas. A commodity that is categorized
as basic food ingredient IS really basic, the point is these materials are the materials most demand or materials
that are needed in the community. The fluctuative and dynamic nature of chicken egg prices requires
government to maintain the existing stock in order to keep prices stable. With the enactment of chicken eggs as
a staple food, the price of chicken eggs or the market price could retrace called market mechanisms, market
mechanisms if they mean higher demand, insufficient production, then the price could be stable, while if demand
is high, the production/supply is not sufficient, then the price will soar ride. So far, the government only needs to
rely on imports to cover the high demand, on the other hand the government can not continuously imports to
cover domestic needs. This paper provides an overview by applying bufferstock management to maintain price
stability and as much as possible to reduce imports. System Dynamic(SD) approach was applied to simulate
dynamic price changes, systems, and actors who interact in a large and complex chicken egg trade, as well as
the feedback of the system to the price of a chicken egg, this paper gives an overview of the conceptual
framework of a chicken egg farm industry, production, demand, by taking into account the price disparity and
inflation at each region with system dynamics approach.

Keywords: Chicken Egg Production and Price, System Dynamics, Conceptual Framework

1 INTRODUCTION should maintain the existing stock so that prices

It is said on the constitution about regional
autonomy No.22 - 1999 (which is implemented on
2001) that resource be the task and responsibility of
local government. So that livestock sector must be
able to sufficient autonomous regional needs first. If
there is excess supply then the advantage can be
supplied to other areas (Decision of the Minister of
Industry and Trade No.115/MPP/KEP/2/1998).
Sembako is nine essential commodities needed by
society according to the Decree of the Minister of
Industry and Trade No. 115/MPP/KEP/2/1998 dated
February 27, 1998. With this designation, the
government should continue to maintain a stock of
sembako, goods that are included in the sembako are
rice, sugar, butter and cooking oil, egg, milk, corn,
kerosene and iodized salt (based on the Decree of the
Minister of Industry and Trade, Clause 1).
Goods that categorized as sembako is goods
which most experienced demand, in this study item
sembako to be studied is chicken eggs (Local and
Broiler Chicken) in East Java.
Fluctuating price of chicken eggs and keep
moving dynamically requires that the government
remain stable [11].
Chicken eggs had set as sembako, so chicken
eggs prices follow market price or it used to be market
mechanism. Market mechanism interpreted when
demand is high, sufficient production, prices are
stable, whereas demand is high, insufficient
production, so price will jumped up [13]. Broiler eggs
price according to Dept. of Farm East Java on August
2014 is Rp 18.000 per Kg, whereas Local chicken
eggs price is Rp 2.000 per grain. In July 2014 Broiler
eggs price is Rp 20.000 per Kg whereas Local chicken
eggs price is Rp 2.000 per grain.
Local and Broiler Chicken data population
between 2008-2013 increased, it means that chicken
farmers begin to realize that business on Egg chicken
farming is getting better. Data from DISNAK JATIM
said that Local chicken population in 2008 was
23,261,021 million and in 2013 reach 33,806,963
million with raising population average 8% per year,
whereas Broiler chicken population in 2008 was
31,472,953 million and in 2013 reach 43,066,361
million with population average increase 10% per year
(table 1). Graph of population rate of Local and
Broiler chicken in East Java could be seen on fig. 1.

1
 ISBN: 978-602-9372-70-0

ARTICLES OF BALI INTERNATIONAL SEMINAR ON SCIENCE AND TECHNOLOGY (BISSTECH) II 2014

Fundamental and Applied Research for Industrial Sustainability: Food, Agrochemical, and Information and
Communication Technology (ICT)
September 2-4, 2014, BALI-INDONESIA

[6]. Detail data about Broiler and Local chicken eggs

Table 1. Local Chicken and Broiler Chicken production can be seen in table 3, and chicken eggs
Population in East Java 2008-2013[6] production graph in figure 2 and 3.
Local Chicken Broiler Chicken There are several factors that cause the rise and
Year decline of Broiler and Local chicken eggs production,
(Buras) (Ayam petelur)
2008 23,261,021 31,472,953 those variables are temperature, humidity, sunlight,
2009 23,596,465 21,396,781 rainfall, wind, disease, cage hygiene based on LIPI on
2010 24,006,814 21,959,505 book Budidaya Ayam Petelur [14].
2011 29,310,251 37,035,251
2012 32,143,678 40,268,631 Table 3. Local Chicken and Broiler Chicken Egg
2013 33,806,963 43,066,361 Production in East Java 2008-2013[6]
Local Chicken (Broiler Chicken)
Year
(Bukan Ras) Ayam petelur
2008 28,681,000 292,786,000
2009 16,337,249 204,146,704
2010 16,621,358 209,515,632
2011 33,839,832 414,719,335
2012 18,941,359 270,700,115
2013 18,548,623 293,532,250

Figure 1. Graph of Local Chicken And Broiler

Chicken Population in East Java 2008-
2013[6]

Total population resident in East Java increasing

(table 2), hence the need for the supply of chicken
eggs will increase. So that local governments should
be able to maintain stable prices and supply of
sembako. In this study sembako items will be studied
were chicken eggs (Local and Broiler chicken). Figure 2. Graph of Local Chicken Egg Production
[Sumber : Diolah, DISNAK].
Table 2. Population in East Java [4]
Year Total Population
2008 37,094,836
2009 37,284,631
2010 37,492,905
2011 37,700,727
2012 38,096,000
2013 38,394,400

The production of Local chicken eggs in 2008

was 28,681,000 million/Kg and in 2013 was
18,548,623 million/Kg. A decline in the production
held in 2008-2009 by 0.43 and an increase in 2010-
2011 is 1.03 then decreased reach 18,548,623
million/Kg in 2013. While the results of the Broiler
chicken eggs production in 2008 by 292,786,000 Figure 3. Graph of Broiler Egg Production
million/Kg and reach 293,532,250 million/Kg in 2013 [Sumber : Diolah, DISNAK].

2
 ISBN: 978-602-9372-70-0

ARTICLES OF BALI INTERNATIONAL SEMINAR ON SCIENCE AND TECHNOLOGY (BISSTECH) II 2014

Fundamental and Applied Research for Industrial Sustainability: Food, Agrochemical, and Information and
Communication Technology (ICT)
September 2-4, 2014, BALI-INDONESIA

the model [1], models can be interpreted also

The rise and decline of Broiler and Local chicken representative of the behavior, variables and
eggs production involved on fluctuate chicken eggs relationships representations of real world problems
price. Fluctuate chicken eggs price can affected by focused primary [17].
several factors they are rising costs of raw materials, Simulation can be used to study the behavior of
the price disparity of each region, and chicken feed the system so as to take and fix the variables of the
[10], inflation and deflation of each region [2] also system which are not working optimally. Modelling
consumption during the months and simulation can produce tools tailored to the profile
Ramadan/Consumption pattern[10]. of an organization to manage the live process and to
Local chicken egg consumption per capita in predict and improve performance [1].
2008 by 3.6 Kg/year and keep increase to 2011 by
3.702 Kg/year, then decrease until 2013 by 2.607 2.2 System Dynamic Models Simulation
Kg/year. Whereas Broiler chicken eggs per capita in Complex dynamical systems approach need a
2008 by 5.616 Kg/year, and increase to 2010 by 6.726 formal models and simulation methods to test,
Kg/year then decrease until 2013 by 6.153 Kg/year improve and design new policies [15].
(table 4) Simulation of dynamic systems is a continuous
simulation that was developed by Jay Forrester (MIT)
Table 4. Egg Consumption per capita in East in the 1960s [3], focuses on the structure and behavior
Java 2008-2013[16] of systems composed between variables and loops
Local Chicken Broiler Chicken feedback (feedback)([17], 2006:63). Relationship and
Year
(Ayam Buras) (Ayam Petelur) interaction among variables declared in the causatic
2008 3.600 5.616 diagram, the feedback process can be categorized into
2009 3.650 5.840 two parts: Positive Feedback and Negative Feedback.
2010 3.702 6.726
2011 3.754 6.622
2012 2.764 6.518 Five stages in developing a system dynamic
2013 2.607 6.153 models [15] :
2 LITERATURE REVIEW Step 1: Problem articulation:
2.1 Modelling Concepts In this stage, we need found the main problem,
Model is a description of the real system, or identify key variable and concept, determine the time
variables into a research center based on the current horizon and characterize the dynamic problem to
state, so the model system can be interpreted as a understanding and designing policy to goals.
description of the real world that has relationships, Step 2: Dynamic hypothesis:
component system and behavior in accordance with Model makers must develop a theory of how to
the problem occur. In this step, need to develop causal

Birth rate Death Rate

Consumption During
Ramadhan Rate
+ +
-
Total Population in Total Egg Demand + - Inflation
Fulfillment Ratio
East Java + +
+ +
Normal Domestic Egg +
+
+ Chicken Consumption + +
Egg Price
Egg Consumption + +
per capita <Time> +-
Total Egg Production
Sun Effect Disparity
Chicken Breeding Purchase of Temperature Dampness Effect + In East Java Deflation
Chicken Effect
+ Rainfall Effect + + +
+ +
Total Egg Farmers + Egg Productivity +
Population in East Java
- + + - + + Cattle Weft
Death Chicken Humidity
Rate
Wind Effect
Age Chicken
Desease Effect
Effect of
cleanness cage
Figure 4. Proposed Metodology Causal Loop Diagram of SD to Maintain Egg Price Stable

3
 ISBN: 978-602-9372-70-0

ARTICLES OF BALI INTERNATIONAL SEMINAR ON SCIENCE AND TECHNOLOGY (BISSTECH) II 2014

Fundamental and Applied Research for Industrial Sustainability: Food, Agrochemical, and Information and
Communication Technology (ICT)
September 2-4, 2014, BALI-INDONESIA

loop diagrams that explain the causal relationship
between the variables and convert the causal loop
diagram into a flow diagram.
Step 3: Formulation:
To determine the dynamic system models, after
change the causal loop diagram into a flow diagram,
further the system must translate into levels, rates
and create auxiliary equations. To estimate the
number of parameters, behavior relationship, and the
initial condition.
Step 4: Testing:
The purpose of testing is to compare the
behavior of simulation models against actual behavior
of the system.
Step 5: Policy Formulation and evaluation:
Modelers could take advantage of the model is
valid for designing and evaluating policies for
improvement.
Validation of simulation models in general, and
System Dynamics (SD) models in particular con-sists
of two types of validity tests [3]:
a. Structural validity tests, the function of which is
to check whether the structure of the model is an
adequate representation of the real structure.
b. Behavior validity tests, the function of which is
to check if the model is capable of producing an
acceptable output behavior.
2.3 Bufferstock
Differentiation of buffer stock and safety stock
are a buffer stock to prevent manufacturers from the
possibility can not meet customer demand while
safety stock helps manufacturers to meet variations in
the supply of raw materials[5].
According to Jensen et al.[10] in Puijman [16],
the main purpose of the buffer stock is to protect
against failures in the supply chain steps in the
production process at the factory to meet customer
demand from the upstream and downstream.
Bufferstock has been implemented in stabilizing
prices as for example in research Swaray [23] showed
that the presence of a bufferstock could stabilize
prices and incomes from cocoa producers.
3 METHODOLOGY
3.1 Causal Loop Diagram
Causal-loop diagrams can be created and are
often used in system dynamics to illustrate cause and
effect relationships. In such diagrams arrows are used
to indicate the relationships. Sometimes, information
about the way in which the relationship works is also
included in the diagram. The relationship between
price and sales is such a relationship, where an
increase in price leads to a decrease in sales [1]. The
system dynamics facilities [8]:
Generates and explain past behavior of the
industry.
Identify variable which related with the egg
chicken production.
To project the future behavior of industry and
also to answer IF-THEN type of questions.
Test the various policies, which can be designed
to increase the performance of eggs production
and market price.
Recommend the suitable policies, which help in
price stabilization, increase inventories, egg price
determination suitable for long-term growth
System Dynamic (SD) can be used to analyze
maintain chicken egg price stable in East Java (figure.
4) because the problem are very complex, instability
eggs prices while demand increases and the decline of

Government Policy
+ Technology
(Extension)
<Egg <Total Egg
Repairing Process Productivity> Production In East <Total Egg
Cattle (Intensification) Java> Demand>
+
+ Maintenance
+ + + Egg Distribution
+
Productivity Egg Production + + Logistic
+ Bufferstock
+ + Management
Quality Of Seeds
(Intensification) + +
+
Market Price
+ +
+ <Fulfillment Ratio>
Chicken Farmer
<Egg Price>
Figure 5. Causal loop scenarios development to Maintain Egg Price Stable

4

ARTICLES OF BALI INTERNATIONAL SEMINAR ON SCIENCE AND TECHNOLOGY (BISSTECH) II 2014
Fundamental and Applied Research for Industrial Sustainability: Food, Agrochemical, and Information and
Communication Technology (ICT)
September 2-4, 2014, BALI-INDONESIA
egg production, figure.4 identifies all variables related
to the eggs price and production, demand, fulfillment
ratio that can stabilize the price of chicken eggs
3.2 Causal Loop Scenarios to price stable
In this section describes the scenario how to
maintain chicken egg price stable (figure 5).
1. Intensification Productivity
Repairing process on the productivity can increase
of egg production, such as variables humidity,
cleanness of cages, provision of vitamins in laying
hens.
Provision of quality seeds From the government
with the super quality can increase egg production,
increased egg production will affect the variable
demand and the supply flow from upstream to
downstream will be achieved and the price of eggs
will be more stable.
2. Bufferstock Management and Technology
Implement price determination of egg given to
market mechanism, which means that when demand is
high and production increased, the price can
decrease/stable, while if demand is high and the
production decrease and then the egg prices to rise and
uncontrolled, all information production will be
through buffer stock so the buffer stock will protect
against failures in the supply chain stages in the egg
production process to meet customer demand and
prices stabilize from upstream to downstream[18].
Whereas, the technology as a bridge between
chicken farmers and the government in terms
exchange of information production, prices and
demand for chicken eggs.
4 CONCLUSIONS
This paper gives an overview of system dynamic
(SD) modeling conceptual framework for scenarios
development to maintain chicken egg price stability. It
gives an overall scenarios of egg price stability using
bufferstock management. It also highlights the major
problems faced by government in terms of maintain
chicken egg price with case studies in East Java,
Indonesia. And how SD modeling can be used for the
analysis of maintain chicken egg price stable.
Proposed methodology for application of SD to
maintain chicken egg price stable in east java,
indonesia and described in the causal loop diagram.
Scenarios generated by using SD will help in analysis
of indonesian egg price. The results and scenarios of
SD analysis can be implemented to all egg chicken
industries in Indonesia.
5
ISBN: 978-602-9372-70-0
5 REFERENCES
[1] Andersson, Carina & Karlsson, Lena. 2001. A
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 ISBN: 978-602-9372-70-0

ARTICLES OF BALI INTERNATIONAL SEMINAR ON SCIENCE AND TECHNOLOGY (BISSTECH) II 2014

Fundamental and Applied Research for Industrial Sustainability: Food, Agrochemical, and Information and
Communication Technology (ICT)
September 2-4, 2014, BALI-INDONESIA

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