An optimal approach for supply and demand management with the consideration of cattle herd structure management: A case study of medium-size dairy cooperative in Thailand

Abstract

Thailand is one of the countries with the economy depends primarily on an agriculture sector. As a result of the government campaign, the country's milk consumption has been continually increasing. Cow milk is produced by farmers of private organizations and dairy cooperatives. A medium-sized dairy cooperative with only a pasteurization plant is in the interest of this study, with the majority of farmer members being smallholders. According to the preliminary study, one of the primary issues is a lack of systematic management of the total cattle herd structure, which results in either an overabundance or a shortage of milk. This research proposes a novel way to supply management that is responsive to the demand for products at any given time, as well as a simplified herd structure management, by resolving the problem in a medium-sized dairy cooperative in Thailand using Mixed Integer Linear Programming (MILP). Based on historical cooperative data and secondary technical farming data, the experimental results of Lingo19 demonstrated that a focused dairy cooperative can increase its total profit and improve the systematic relationship between supply and demand by maintaining the optimal cooperative herd structure.