Supply and Demand Model for a Chili Enterprise System Using a Simultaneous Equations System

Meuthia Rachmaniah, Arif Imam Suroso (), Muhamad Syukur and Irman Hermadi
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Meuthia Rachmaniah: Computer Science Department, IPB University, Bogor 16680, Indonesia
Arif Imam Suroso: School of Business, IPB University, Bogor 16151, Indonesia
Muhamad Syukur: Agronomy and Horticulture Department, IPB University, Bogor 16680, Indonesia
Irman Hermadi: Computer Science Department, IPB University, Bogor 16680, Indonesia

Economies, 2022, vol. 10, issue 12, 1-21

Abstract: The supply and demand of various fresh chili types correspond to one another simultaneously because they can be complementary or substitute products. This study aimed to simultaneously examine the supply and demand model of red chili and cayenne peppers to support innovative chili enterprise system development. The methodology is the simultaneous equation system panel data using the years 2010–2020 time-series and provincial cross-sectional data combined with data mining techniques. The two-stage least square method was used for the estimation and simulation of the models. The results of the models comprise three identities and ten structural equations. The resulting models are all statistically fit with some drawbacks owing to the micro-level data availabilities. The simulations on the labor wages, prices, demand, and production for red chili and cayenne peppers affected the other variables within the model. In conclusion, the chili supply and demand models could support the development of the innovative chili enterprise system; however, this requires proactive collaboration and participation from all the relevant institutions and actors. Moreover, this research model is potentially applicable to other horticultural commodities.

Keywords: business analytics; chili agro-system; data mining; data preprocessing; decision support system; enterprise system; simultaneous equation system; supply and demand; two-stage least square (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
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