Publish with us Publishing partnerships

3. Problem Description and Modeling

The basic assumptions of the system dynamics model of the pig supply chain are as follows:(1)Political and economic stability: the pig breeding environment is stable, free from major diseases and disasters(2)Stable behavioral preferences, including the stability of supply chain participants and the stability of consumer consumption(3)Every link in the pig supply chain is considered as a whole

3.1. Pig Price Influencing Factors’ Analysis

Price modeling is the most difficult part of economic modeling. In some papers, it is unreasonable to adjust the balance of supply and demand around the balanced price of live pigs. The market does not know the true supply curve and demand curve, so the equilibrium price cannot be assumed by calculating the average price of live pigs. Market decision makers can only adjust prices through trial and error, gradually adjusting prices to equilibrium prices; the process is called mountain climbing. According to the anchor and adjustment principle, this paper constructed a pig breeding model, and the price function is constructed as

As the anchor point, the expected price  will be adjusted to the historical price. We use adaptive expectations, such as exponential smoothing, to construct the expected price function. The signal in the formula represents various factors that affect the price of live pigs, such as supply and demand balance, unit cost, and other factors, to realize the price adjustment process.

As can be seen from Figure 1, since 2003, China’s pig price has gone through four cycles: 2003.5–2006.5, 2006.5–2009.5, 2009.5–2014.4, and 2014.4–2018.5. The cycle length is 3 years, 3 years, 5 years, and 4 years, respectively, with an average cycle length of 3.75 years, which conforms to the traditional pig cycle.