An Empirical Study on Asymmetric and Non-Proportional Price Response Function in the Shipment Timing Decision-Making Support System for Agricultural Products

Abstract

STSS (Shipment Timing Decision-Making Support System for Agricultural Products) is designed to manage shipping dates to improve sales profits for agricultural products that are stored in warehouses. The purpose of this study is to increase the predictability of the price variable among other variables included in this system to better predict wholesale prices at the shipping dates. This study suggests the use of an asymmetric price response function and a non-proportional price response function, which can comprehensively trace price changes in the next period based on price increases or decreases at certain levels in the previous period. Additionally, the study aims to conduct an empirical analysis of the whole market as well as the market segments.The data used were wholesale prices and delivery volumes for 15kg of fine grade Fuji apples traded at Garak Agro-Fishery Market located in Garak-dong, Seoul. The analysis was conducted by market segment, and confirmed periods when the responses towards a given day's price levels were big and small when previous day's price levels for wholesale apples decreased or increased during the year. Through this, the best opportunity to adjust shipping dates of apples and to increase profits could be suggested.