A model for studying the policies of improvement of chicken meat industry supply chain by

using system dynamics

Abstract

Iranian chicken meat industry has always been encountered to oscillation challenge and high growing prices of chicken. System dynamics

can be used as a management tool to estimate system future. The purpose of this paper is to find the best way to prevent chicken pri ces from

increasing more by equal investments. The trend of each variable is identified by using data and statistics from 2009 to 2014. Type of the

problem and supply chain structure specify "chicken meat price" and "production rate" as the key variables of the system. Other variables

are specified and their feedback relationships are sketched in causal loop diagram and by utilizing these variables and dependencies

between them, the main model has been made in form of stock and flow diagram. Considering the existing capabilities for improvement in

supply chain and experts opinion these strategies were proposed; "reduction of breeding period", "modernization of production facilities",

"Increase in production of feed pellets" and "energy conservation". After implementing the model and testing various scenarios, strategies

were prioritized based on key indicators. The strategy of "modernization of production facilities" was introduced as the best strategy in

today's country situation of chicken meat industry for the next three years.

Key words: System dynamics; Supply chain; Chicken; Economic model; Simulation; policy

1 IntroductionSterman (2000) defined supply chain as the set of structures and processes that an organization utilizes to deliver output to customer. In

other words, supply chain is formed from all elements that are directly or indirectly involved in satisfying a customer expectations (Chopra

and Meindl, 2013; Manataki et al., 2014). Although Supply chain management (SCM) was introduced in the early 1980s, the approach has

received most attention since in the early 1990s (Shamsuddoha, 2015; Svensson, 2007). The concept of SCM comes from the fact that there

are dependencies between levels in channels from the start point to the consumption (Alderson, 1957, 1965; Hakansson and Snehota, 1995;

Lambert et al., 1998; Mccammon et al., 1965; Stern, 1969; Svensson, 2007; Weld, 1916). Alvarado and Kotzab (2001) defined supply chain

management as the integration of business processes among channel members with the aim of better performance for the entire channel

system. There was a constant challenge between two successive rings of a supply chain in traditional management and optimization of each

subsystem does not lead to optimization of the entire system. But supply chain management with a holistic view of system can optimize

entire system and this sight not only forced the managers to make their own organization's functions more efficient but also to consider the

interests of the entire supply chain rings.

Chicken meat is a high consumed agricultural product and the main source of protein in the world. (Darivandi Shoushtari et al., 2011) Five

elements are believed to have led to the increasing popularity of chicken meat:

value/price compared with other foods;

good nutritional profile/low in fat;

convenience of preparation,

versatility, and

well suited for quick-service and casual dining menus. (FAO, 2010)

Chicken meat industry is the third industry in Iran after petroleum and petrochemical industry. The industry has an important role in

providing food and employment opportunities in Iran (Azadeh et al., 2014). According to FAO statistics Iranian chicken meat industry has

the 8th chicken meat production rank in the world (FAOSTAT, 2013).

Nevertheless this industry encountered too many problems in this country which illustrated in price rises and oscillations can be listed in

two categories; 1. Disaster management in the chicken meat industry and unwillingness to train in traditional managers, the high breeding

period, inactivity or semi-activity of many production farms, absence of integrated management in the production chain, production

fluctuations in day-old chicken, independency of production units and lack of contractual system; 2. The high cost of production due to the

high feed conversion ratio (FCR), old facilities, high energy consumption, fluctuation in price of feed, and failure to make full use of feed

pellets. Calculation shows on average 60 to 70 percent of production costs of chicken meat is dedicated to feed costs. Corn and soybean is

important because much of it is imported, and exchange rate fluctuations, costume's tariff and most of all delay of allocating exchange have

dramatic effect on its price. The complexity of chicken meat supply chain management grows due to the increasing duration of supply chain,

so the managers of supply chains has to be up to date in order to be effective in managing the increasing complexity (Darivandi Shoushtari,

2013). The purpose of this study is to find the best investment procedure which in short-term (two years) could lead to price stability and

productivity in the industry so as to both producer and costumer be satisfied.

2 System DynamicsForrester (1961), in Industrial Dynamics, proposed system dynamics (SD) as a modeling and simulation methodology for long-term

decision-making in dynamic industrial management issues (Das and Dutta, 2013). Since then, System dynamics has been applied to

problems ranging from corporate strategy to the dynamics of diabetes. It can be applied to any dynamic system, with any time and spatial

scale (Sterman, 2000). For instance System dynamics has been widely utilized for studying the dynamics of population, ecological, social

and economic systems (Purnomo et al., 2009). Feedback structure of system is shown in form of causal loop diagrams in system dynamics

methodology. The causal loops diagram visualizes the main feedback mechanisms. These mechanisms are negative (self-correcting)

feedback loops or positive (self-reinforcing) ones. Stock and flow diagram shows material structure of the system. A system dynamics model

includes flow or stock variables. The stock variables are gathering places in the system (such as inventories) while the flow variables

indicate the system flows (such as order rate). Model structure and relationships among variables is shown with the stock and flow

diagram. System dynamics also provides a holistic view of system structure which can be used for predicting the future of system.

2.1 Simulation of supply chain by use of system dynamics

There are several reasons that make system dynamics as a good methodology for modeling of the supply chains: first, the ability to

understand the system as a whole, then analyzing the interactions between the various components of the integrated system and finally

supplying feedback without decomposing (Özbayrak et al., 2007).

The basic idea of this field of science formation originated from a project for General Electric was conducted by Forrester (1997). He

modeled a simple four-level supply chain. In Sterman (2000) view, a supply chain includes two elements: 1.stock and flow structures for the

acquirement of the inputs and the process, 2. The management policies ruling different actions.

Gupta and Kortzfleisch (1987) presented a System Dynamics model to evaluate a number of investment strategies for agriculture

development and analyze the consequences of the strategies. The model simulated investment strategies to see the performance of the

overall system. Georgiadis et al. (2005) offered a system dynamics modeling framework for the strategic supply chain management of food

chains. They propose some guidelines for the methodology and present its development for the strategic modeling of single and multi-

echelon supply chains. (Oliva and Revetria, 2008) developed a system dynamic model to support cold chain management in food supply

chain. He also concluded that system dynamics is suitable for analyzing the cold chains management. Kumar and Nigmatullin (2011) under

a monopolistic environment investigate the non-perishable product food supply chain performance by use of system dynamics. They used

the method to determine the impact of demand variability and lead-time on performance of different parts of the supply chain. Their model’s

area consists of 4 parts – Manufacturing, Distributing, Retail and consumers. Tedeschi et al. (2011) utilized System Dynamics modelling as

a management tool for small ruminant production. They used modelling approach to develop management tools for animal (such as goat

and sheep) production. Teimoury et al. (2013) studied supply chain of perishable fruits and vegetables identifying the best import quota

policy, by proposing a multi-objective model in a system dynamics framework. Their model minimizes price variation and mean of price for

a period of time and maximizes the mean of the wholesaler’s markup to help decision makers providing reasonable import quota policy.

Stave and Kopainsky (2015) demonstrates how system dynamics can conceptualize the mechanisms and pathways that transmit, and amplify

or reduce the effects of disturbances on food systems.

Due to the development of the system dynamics tool in modeling and analyzing varied fields, several studies have been conducted to

evaluate various aspects of the chicken industry. Naser ranjbar (2000) studied the oscillation of the chicken meat industry using the system

dynamics technique. A model is developed and its behavior is simulated and the responses of the system to different changes in the

conditions are analyzed. After analyzing the results of adapting different policies, freely import and export of chicken meat (without tariff

and subsidy), providing the raw materials timely and reducing the breeding period were introduced as the optimized solutions. Minegishi

and Thiel (2000) applied system dynamics modelling for simulation and focus on understanding the complex logistic behavior of chicken

meat supply chain. This model has made it feasible, to study the influence of different policies, and to show the phenomena of instabilities

and system controls in supply chains faced with serious hazards in their customer demand. Vo and Thiel (2011) developed a model to

analyze the French chicken meat supply chain behavior under the bird flu crisis by using system dynamics. The results of simulation showed

that in a short period of time, the fluctuations of customer demand and production in each of the supply chains level become larger and

impact on the whole supply chain stability. Shamsuddoha et al. (2013) showed a poultry model based on system dynamics to find out the

interaction among elements in the system by use of VENSIM software. Their research developed a qualitative model on poultry operation

and provides a simulation model to explore possible opportunities available by recycling poultry wastes. Darivandi Shoushtari (2013)

Considered the governmental structure of the poultry industry in Iran and aiming for decreasing the role of government in the supply chain

management, redesigned a management structure by using systems models. Azadeh et al. (2014) for simulation of the oscillation of the

chicken meat market after determining the import tariffs of corn and soybean, added a system dynamics model of the market to the artificial

neural network of the Iranian poultry supply chain as a component of it. Recently, Shamsuddoha (2015) developed an integrated model to

analyze the Bangladeshi chicken meat supply chain. His research contemplates both sustainability and supply chain problems for the

purpose of incorporating them in the poultry supply chain. The research combines ‘design science’ method with system dynamics (SD). He

also found the integration of the supply chain can bring economic, social and environmental sustainability with a structured production

process. He says Bangladesh government policy makers in poultry industry can apply the model results in practice with slight adjustments.

3 MethodologySystem dynamics is made up of system, feedback, level, and rate (Yim et al., 2004) And its methodology attempts to model each of the causal

relationships expressly, and to trace the resulting system behavior over time (Smith and van Ackere, 2002). The methodology of the current

study is based on the overall procedures of the system dynamics approach which is followed step by step. The study begins by indicating

and identifying a problem. The effective variables on the problem are identified and a dynamic hypothesis is stated for the problem solving

methods. Afterwards, in an iterative process, the structure of the problem is modeled using the data and statistical information of the system

components and experts opinion. Finally, the simulated model and the identified solutions are examined.

3.1 The Dynamic Hypothesis

The chicken meat production and processing chain starts with a pure line farm and continues with Grandparent (GP) and parent stock (PS)

farm and ends with the broiler farm. The bred chickens are then transferred from the broiler farms to the slaughterhouse and after that they

enter the distribution network. Each pure line mother breed can produce 45 GP breed, each GP mother breed can approximately produce

45 PS breed and each PS mother breed can produce 120 to 130 broiler chickens. More than 350 tons meat is generally produced by each

GP breed. The breeding period, conditions and the weights of each of these chickens are different from those of the other one. Since it is

impossible to store fertile eggs and chickens for a long time, it is a just in time process which causes many oscillations in the prices of

different types of chicken. The present model starts from the PS breed farms. The statistics associated to the hatching rate of PSs are

available in the registration system of day-old chick producers guild of Iran (SDOCP-Statistics, 2013). Furthermore, the number of the PS

chicks from the GP chickens is predicted in next months. According to the statistics and predictions, the rate of monthly hatching of the PS

exogenously enters the model. The PS chicks are reared for 6 months and in all over the breeding period, the mortality rate is 8 percent

(1.38 percent monthly). After 6 months, these chicks will be mature PS including 85 percent parent mothers and 15 percent roosters. The

laying period lasts for 9 months and 125 day-old chicks are averagely produced per PS which is higher than past and has a rising trend. At

the time of extensive decrease in the price of the chick, the cost of the PS maintenance is more than its chicken prices and low-efficient

chickens will be compulsively omitted. When the price of the chick increases more than the production cost, after the hatching, PSs are let

rest for 2 months so that they can hatch again for a 4-month period. This resting period is called “forced molting”. The advantage is that

less time is devoted to production and, on the other hand, the disadvantage is that the quality of these PSs’ chicks is not as good as the

ordinary chicks and thus, prices of these chicks are lower. There is no accurate statistic of the number of farms in which PSs are forced to

molt. The eggs produced by PSs are incubated in an incubator, and after 21 days they hatch and become day-old chicks. There are some

losses in laying and incubating steps. However, the average of the produced chicks per PS is used in order to shorten the model.

3.2 System Limitation

All the broiler and PS farms, incubation units, feeding units, chicken slaughterhouses and fridges are in the boundaries of model. The

livestock and poultry supporting company of the Ministry of Agriculture that imports the main portion of feed ingredients and frozen

chickens in order to regulate the market is also included in the boundary.

3.3 Causal loop Diagram

The causal loop diagram for chicken meat supply chain model is drawn, considering its key variables and factors affecting on them and also

the relationships between different variables. These variables and the type of relationship between them are identified through consulting

the experts of Agricultural organization, breeders, chicken feeds manufacturers, professors of the fields of study related to poultry, etc.

Figure 1- causal loop diagram for chicken meat supply chain

3.3.1 The negative Loop of Change in Hatching Due to the Change in the Price of Chicken (A)

The rise in the chicken price leads with a delay to the increase in the number of chicks that enter the empty farms. In other words, this rise

in demand increases purchase of chicks. On the other hand, a weaker effect, namely reduction in the inventory and consequently the

increase in the chick price causes some of the purchases to be reduced. The rise in buying increases the inventory of the chickens being

reared and after 50 days increases the stock of chicken meat. As we have seen, this feedback balanced chicken prices.

3.3.2 The balancing Loop of Change in the Capacity of the PS Breeding Due to the Change in the Price of the Chicken (B)

A PS starts producing fertile eggs at about six months of age and finishes production at about nine months of age. Given that the capacity of

PS farms is more than needed in the country, many of them are not completely active. The rise in the price of day-old chick causes that

many of the breeder farms decide to purchase day-old PS chicks. Approximately six months should pass from the hatching of the PS until

they can lay. After a six-month delay, the numbers of layer PSs and the fertile eggs increases. After 21 days, the fertile eggs become day-old

chicks. The increase in the number of day-old chicks decreases the chick prices.

3.3.3 The balancing feedback of Change in Hatching Due to the Change in the Price of Grain (C)

The price of feed is the most important factor which affects the cost of chicken meat production. The increase in price of each ingredient

rises the production cost. This increase reduces the rate of profit. The ‘Chick demand’ variable is positively connected with the ‘Chicken

profit’ variable. It means, if Chicken profit decreases, chick demand also decreases. By decreasing in chicks demand, chicks purchase and

rearing them, the feed consumption in chicken farms also will be decreased. Therefore, due to the fall in demand for feed, its price will

eventually be balanced.

3.3.4 The Balancing Loop of the Chicken Price (D)

Any change in the chicken price changes demand in the opposite direction. This increase or decrease in the demand changes the ratio of the

inventory to demand, and it causes balancing in chicken’s price.

3.3.5 The negative Loop of the Decline in Chicken meat Price because of an Increase in the Consumption of the Red Meat (E)

The increase in chicken meat prices decreases the ratio of the price of the red meat to the price of the chicken. This ratio guides the

consumer to choose the type of meat. Further fall in this ratio leads to increase in consumers’ tendency towards the red meat. The increase

in the demands for the red meat decreases the demands for the chicken meat. Thus, this balancing loop decreases the chicken meat prices.

On the other hand, regarding the fact that red meat and chicken meat are substitute for each other and considering the increasing demand

for the red meat, the price of red meat increases. After the red meat prices rise, its demand decreases and somehow this fact balance

chicken prices.

3.3.6 The Loops of the Effects of Import, Export, Storage and Supplying the Frozen Chicken Meat (F)

State Livestock Affairs Logistics Co of Iran is in charge of a great part of the affairs related to import, export, Storage and distribution of

the frozen chicken meat. Although when the price of chicken meat decreases, the slaughterhouses freeze the chicken meat so that they offer

it to market when its price increases. The motivating factor of all these actions is the equilibrium price of the chicken meat. When chicken

meat price at the market is lower than the minimum approved price, the supporting company stores the chicken meat in fridges. If the

production is more than the capacity of fridges and the predicted demand in future, the extra chicken meat will be exported. When the price

of chicken meat is higher than the maximum approved price by the company, the market is supplied with the frozen chickens in order to

meet the extra demands. When the increase in demand is more than inventory in fridges, the chicken meat will be imported by the company.

3.3.7 The reinforcing Loop of the Increase in the Continuous Demand for the Chicken Meat (G)

Per capita consumption of the chicken meat in our country is higher than the global average, but lower than the developed countries

average. In recent years, this per capita consumption has rose due to the increase in tendency to consume meat, the national income and the

welfare level. The loop of the demand and supply is self-reinforcing because of the mentioned reasons unless stronger loops decrease the

consumption.

3.3.8 The Positive Loop of National Income (H)

The poultry industry is the biggest industry after the oil industry. Regarding the fact that millions of people are directly or indirectly

involved in this industry, the increase in the income of this industry leads to the increases in the national income and the per capita income

of the country. On the other hand, the rise in the per capita income increases the demand and consumption in the country. More

consumption also increases the income. Thus, the income of the chicken meat industry is continuously increasing.

3.4 The General Structure of the Model

Considering the mentioned theoretical issues in previous chapters and the causal loop diagram, the stock and flow model is designed and

the related equations are presented. The dynamic purpose of the system is not to present the clear and probably optimized numbers and

values for different variables in different years; rather the purpose is a better understanding of the interactions among the variables and the

important feedbacks of the system. The population growth rate, the currency exchange prices, inflation rate, the PS hatching rate and the

mean of the growth time of broiler are the exogenous variables of the model.

Figure 2- stock and flow diagram

4 Simulation of the modelIn this step, the model is simulated and its coordination with the real results is evaluated. All the exogenous variables of the model are

growing increasingly (e.g. the population growth rate, inflation rate). Thus, any fluctuation in the model is due to the inner structure and

the interactions among the variables.

4.1 Dynamic behavior and Model Validation

There are various methods to evaluate the validity of the model. One of the common methods to evaluate the simulated models is to

reproduce the previous behaviors of the system. The important point is that the reproduction of the behavior must be evaluated and not the

reproduction of statistical data. There is no model which can reproduce the reality accurately, because modeling is always accompanied

with simplification and it ignores some parts of the reality. Thus, some percentages of error are unenviable in a model. In the next sections,

the output statistical data of the model are compared in order to evaluate the model validity.

Figure 3-consumption of broiler meat: simulated versus real

Figure 4-the production of broiler meat: simulated versus real (ton/month)

Figure 5- the price of chick: simulated versus real (Rial)

Figure 6- corn price: simulated versus real (Rial)

Figure 7- price of live broiler: simulated versus reference (Rial)

4.2 The Model Comparison Method

The key variables in the supply chain must first be determined in order to compare its performance in different states. Afterwards, the

conditions of each of the strategies must be applied in the model and policies’ performance must be compared in the key variables and then

they must be interpreted. Considering the goals of the current study and evaluation of market’s price sensitivity, the key variables of the

model are “the cost of producing one kilogram of chicken meat”, “the monthly rate of chicken meat production” and “the price of the

chicken meat”.

The chicken rearing capacity of the country has significantly increased in recent decades. At the present time, this industry needs

improvement in the quality of the production system not in the quantity. There are some ways to improve the chicken meat industry quality

which can be mentioned through analyzing the structure of the chicken meat supply chain. These methods are described as following:

1) The Timely and Adequate Import of Feed Ingredient

The government officials must know that the delay in importing and avoiding the optimized allocation of foreign exchange required for the

import of feed causes a sudden increase in the price of inputs and consequently the increase in the chicken meat price. Since chicken meat is

one of the basic commodities, the import of chicken feed must be given priority as food. It must be decided from the outside of the chicken

supply chain and is related to the governmental macro-policies about allocation of the foreign exchanges and must be analyzed in a system

associated to the budget allocation prioritization not in this model. Furthermore, the delay in allocation of foreign exchanges to import in

order to release the goods in ports causes not only the shortage of feed inputs in the market but also the increase in the transport cost and

thus, the total price of the grain inputs rises.

2) Building up a Comprehensive database to predict the rates of the Production and the Control of bringing and Incubating of GP breed,

PS breeds and Broiler chickens:

Currently, the Ministry of Agriculture is operating a project in order to reforming the incubation and production rate of the chicken

industry. Through performing this project the production rate can be controlled and the shortages and overproduction will be removed.

This project has already been operated in the website of the day-old chick producers’ guild of Iran. The problem of this system is that it

presents the hatching statistics at the end of month and has no instruction to decrease or increase the hatching.

3) Improvement in the Production Technology

Regarding the poultry industry, country’s production capacity is more than the production rate. Currently, the capacities of meat producing

units are more than 310 million broilers in each period. But, in the most optimistic situation, 220 million broilers have been reared in each

period. Some of poultry farms avoid to bring chicks for some reason including the high working capital of this industry, price fluctuations,

the high risk of the production and the total cost becoming higher than the sale price in some periods.

The technology improvement may include the improvement of the heating and cooling systems of the poultry farms, using the mechanized

feeding systems in order to avoid waste of grain, insulation and avoiding the energy dissipation in farms. Currently, the Ministry of

Agriculture grants the adequate financial credits for the improvement of farms technology. These credits are paid after being investigated in

the related commission and referring to the governmental banks and institutes.

4) Increasing the quality control of the pellets that prepared by manufacturers in order to assure farmers to use this feed.

5) The government funding for investment in the poultry feed in order to increase the production of this industry and reduce the monopoly

of the feed producers.

6) Feed pellets importing in order to reduce the price of this product in the short time.

7) The liberalization of the exchange rate and the import and export of the chicken based on the global price without tariffs and subsidies.

The high feed conversion ratio in comparison with developed countries forces us to try to decrease this factor.

4.3 Policy design

Policy determination from the beginning is important due to its guiding role in decision making about what to leave out from the model

(Ford, 1999). Policy design is the creation of completely new strategies, structures, and decision rules (Sterman, 2000). Considering the

approach to the system, the purposes of the study, the available solutions and expert opinions, the policies are introduced in this section.

Depending on the industry conditions, government has a variety of options to reduce the price of chicken meat through investment and other

corrective actions. It must be mentioned that investment is feasible only in installations, facilities, feed pellets production, energy

conservation and supply of natural gas to the chicken farms.

4.3.1 Increasing the Production of the feed pellets

In this policy, regarding the low rate of the consumption of the feed pellets as the chicken feed and due to the clear advantages of the pellet

consumption compared to the mash, the percentage of the pellet consumption is increased. In the model the pellet production in the next two

years has reached to the maximum of the practical production capacity of the pellets feed.

4.3.2 The modernization of the Chicken Farms

Modernization of the chicken farms means to improve the facilities of heating, cooling, feeding and drinking, repairing of buildings and

installing other equipment in chicken farms. Through investing in the improvement process, the percentage of the feed wastes of the chicken

farms can decrease and the weight gaining can improve. In this policy, the governmental in this matter, increases investment to a specific

amount of money.

4.3.3 Fuel conservation

Although diesel was the most used fuel for the production farms, its share in the production cost is very low. The reason is the low and

subsidized price of the fuels in Iran (Heidari et al., 2011). Considering the high energy consumption in different industrial sections in Iran,

the government is trying to reform the energy consumption pattern. The purpose of this policy is to replace the diesel fuel with the natural

gas and electrical power and equipping the chicken farms with insulation materials and advanced temperature control systems that not only

optimizes the production system, but also reduces consumption and cost of the energy. In this years, the government is paying adequate

financial credits to piping natural gas to chicken farms through the governmental banks and institutes. In this policy, the governmental

investment in this matter, equal to the same value in previous policy, increases to a specific amount of money.

4.3.4 Reduction of breeding Period

In this policy the breeding period of the chickens decreases linearly from 50 days during 20 months to 45 days.

4.4 Results and Suggestions of the Study

After modeling and selecting the policies, the future of the system is studied and the operations of different policies about key variables of

the model are analyzed using the simulation.

4.4.1 The Results of the Study

The model is able to provide quantitative comprehension of the chicken meat industry. Figure 8 shows the cost of production of one

kilogram chicken meat in different policies. Since the share of the fuel cost is low in the production cost, the strategy of fuel conservation

and supply natural gas to chicken farms does not change the production cost greatly. In the policy of decreasing the breeding period, the

production cost has strongly increased due to the increase in chick demand then the rise in the price of chick and finally disability to change

PS layers in the short term. The high consumption of the pellet also increases the production cost. Thus, it is just the modernization policy

which decreases the total cost compared to the current status.

Figure 8- Cost of chicken meat production (Rial)

Regarding the changes in weight gaining and the number of mature chickens in each strategy, the weight of the produced chicken changes.

In Figure 9 the monthly production rate of the chicken meat is shown for the different policies. The policy of decreasing the breeding period

decreases the chicken production rate through increasing the hatching rate. The fuel conservation and supply of natural gas to chicken

farms does not change the chicken production rate. The increasing of the pellet increases the chicken production. Optimization causes the

highest increase in chicken production. Since the demand rate is regarded as a fixed value in different policies, the reverse of the results for

the effect of the change in the production rate on the chicken price, occurs.

Figure 9- production chicken meat (ton/month)

Figure 10- Live chicken price (Rial)

5 ConclusionDue to the advantages of the policy of modernization and production facilities in many key variables of the chicken meat supply chain, the

policy is introduced as the first solution of the current study. Regarding the decrease in the feed conversion ratio, the capability of reduction

of breeding period to reduce the weight and grain consumption was predictable. However, the purpose of this study is the comprehensive

analysis of this strategy using the indexes of production rate, price and other key factors in the supply chain. After analyzing this strategy,

it was concluded that the chicken meat industry of Iran cannot use such strategy due to being away from the global market. Since the great

part of the production cost is due to grain and chick costs, the strategy of fuel conservation and supply of natural gas to chicken farms

decreases the production costs slightly.

On the other hand, this strategy increases the subsidies specified to the chicken meat industry because agriculture sector in Iran receives a

large subsidy in costs of electricity and natural gas. A small part of the decreased cost is due to the decrease in energy consumption.

Obviously it is necessary to use electricity and natural gas in chicken farms, however, considering the current conditions of the chicken

meat industry and the decision of the current government to decrease the prices and increase the production rate of this product in a short

time, it is felt the need to invest on modernization and increasing the consumption of pellet feed.

The percentage of pellet feed consumption in Iran is lower than those of developed countries where the pellet feed is always used.

Currently, due to the few number of feed pellet mills in each area, its balanced price is almost high. Therefore, chicken farms do not show

tendency to completely use this grain. At least a five-year program must be planned to develop the production of the feed pellets. Thus, this

industry will be able to grow in such a way that both the farmer and the producer are content. It is recommended government through

importing the adequate amount of this feed reduce the balanced price, during these years.

6 Suggestions for Further StudiesConsidering the advantages of the vertically integrated production process, it is suggested to conduct a study on the barriers that chicken

meat industry may be faced in reaching the integration. The simulated model of the current study can be applied as a basic model in order

to promote the future developments in the area of the dynamic analysis of the supply chain of other agricultural industries. Besides, the

presented model simulates the financial flow and physical flow of this industry. Thus, other flows such as the information flow can be added

to it.

ReferenceAlderson, W., 1957. Marketing Behavior and Executive Action: A Functionalist Approach to Marketing Theory. R. D. Irwin.Alderson, W., 1965. Dynamic Marketing Behavior: A Functionalist Theory of Marketing. R.D. Irwin.Alvarado, U.Y., Kotzab, H., 2001. Supply Chain Management: The Integration of Logistics in Marketing. Industrial Marketing Management 30, 183-198.Azadeh, A., Darivandi Shoushtari, K., Saberi, M., Teimoury, E., 2014. An Integrated Artificial Neural Network and System Dynamics Approach in Support of the Viable System Model to Enhance Industrial Intelligence: The Case of a Large Broiler Industry. Systems Research and Behavioral Science 31, 236-257.Chopra, S., Meindl, P., 2013. Supply chain management. strategy, planning & operation. Prentice Hall.Darivandi Shoushtari, K., 2013. Redesigning a Large Supply Chain Management System to Reduce the Government Administration: A Socio-Functional Systems Approach. Syst Pract Action Res 26, 195-216.Darivandi Shoushtari, K., Ghasemi, H., Zarezadeh, M., 2011. Analyzing and improving chicken meat supply chain using Beer's VSM, SCOR model and Ackoff's circular organization. Proceedings of the 55th Annual Meeting of the ISSS-2011, Hull, UK 55.Das, D., Dutta, P., 2013. A system dynamics framework for integrated reverse supply chain with three way recovery and product exchange policy. Computers & Industrial Engineering 66, 720-733.FAO, I.C.D., 2010. Agri business handbook, poultry meat and eggs.FAOSTAT, 2013. Food and Agriculture Organization of the United Nations, Satatistics division. http://faostat3.fao.org/browse/Q/QL/E.Ford, F.A., 1999. Modeling the Environment: An Introduction to System Dynamics Models of Environmental Systems. Island Press.Forrester, J.W., 1961. Industrial Dynamics. Massachusetts Institute of Technology Press.Forrester, j.w., 1997. System dynamics and K-12 Teachers. Massachusetts Institute of Technology.Georgiadis, P., Vlachos, D., Iakovou, E., 2005. A system dynamics modeling framework for the strategic supply chain management of food chains. Journal of Food Engineering 70, 351-364.Gupta, G., Kortzfleisch, G., 1987. A system dynamics model for evaluating investment strategies for agriculture development. Computer Science and Systems Analysis, Miami University.Hakansson, H., Snehota, I., 1995. Developing Relationships in Business Networks. Cengage Learning.Heidari, M.D., Omid, M., Akram, A., 2011. Energy efficiency and econometric analysis of broiler production farms. Energy 36, 6536-6541.Kumar, S., Nigmatullin, A., 2011. A system dynamics analysis of food supply chains – Case study with non-perishable products. Simulation Modelling Practice and Theory 19, 2151-2168.Lambert, D.M., Cooper, M.C., Pagh, J.D., 1998. Supply Chain Management: Implementation Issues and Research Opportunities. The International Journal of Logistics Management 9, 1-20.Manataki, A., Chen-Burger, Y.-H., Rovatsos, M., 2014. SCOlog: A logic-based approach to analysing supply chain operation dynamics. Expert Systems with Applications 41, 23-38.Mccammon, B.C., Little, R.W., Schwartz, G., 1965. Marketing channels: analytical systems and approaches. Science in Marketing, John Wiley & Sons, New York, NY.Minegishi, S., Thiel, D., 2000. System dynamics modeling and simulation of a particular food supply chain. Simulation Practice and Theory 8, 321-339.Naser ranjbar, K., 2000. dynamical evaluate of fluctuations in poultry industry and influenced variables on this. master thesis in Mazandaran university of science and technology, (unpublished).Oliva, F., Revetria, R., 2008. A system dynamic model to support cold chain management in food supply chain, In: Proceedings of the 12th WSEAS international conference on Systems. World Scientific and Engineering Academy and Society (WSEAS), Heraklion, Greece, pp. 361-365.Özbayrak, M., Papadopoulou, T.C., Akgun, M., 2007. Systems dynamics modelling of a manufacturing supply chain system. Simulation Modelling Practice and Theory 15, 1338-1355.

Purnomo, H., Guizol, P., Muhtaman, D.R., 2009. Governing the teak furniture business: A global value chain system dynamic modelling approach. Environmental Modelling & Software 24, 1391-1401.SDOCP-Statistics, 2013. the Iranian society of day-old chicken producers (SDOCP). http://www.sdocp.ir/Reports/Actual/Default.aspx.Shamsuddoha, M., 2015. Integrated Supply Chain Model for Sustainable Manufacturing: A System Dynamics Approach, In: Sustaining Competitive Advantage Via Business Intelligence, Knowledge Management, and System Dynamics, pp. 155-399.Shamsuddoha, M., Quaddus, M., Klass, D., 2013. A system dynamics approach for poultry operation to achieve additional benefits, In: Simulation Conference.Smith, P.C., van Ackere, A., 2002. A note on the integration of system dynamics and economic models. Journal of Economic Dynamics and Control 26, 1-10.Stave, K.A., Kopainsky, B., 2015. A system dynamics approach for examining mechanisms and pathways of food supply vulnerability. Journal of Environmental Studies and Sciences 5, 321-336.Sterman, J., 2000. Business Dynamics: systems thinking and modeling for a complex world. McGraw-Hill, Boston.Stern, L., 1969. Distribution channels: a social system approach to the study of marketing. Social Responsibility of Marketing, American Marketing Association, Chicago, IL.Svensson, G., 2007. Aspects of sustainable supply chain management (SSCM): conceptual framework and empirical example. Supply Chain Management: An International Journal 12, 262-266.Tedeschi, L.O., Nicholson, C.F., Rich, E., 2011. Using System Dynamics modelling approach to develop management tools for animal production with emphasis on small ruminants. Small Ruminant Research 98, 102-110.Teimoury, E., Nedaei, H., Ansari, S., Sabbaghi, M., 2013. A multi-objective analysis for import quota policy making in a perishable fruit and vegetable supply chain: A system dynamics approach. Computers and Electronics in Agriculture 93, 37-45.Vo, T.L.H., Thiel, D., 2011. Economic simulation of a poultry supply chain facing a sanitary crisis. British Food Journal 113, 1011-1030.Weld, L.D.H., 1916. The marketing of farm products. The Macmillan company, New York.Yim, N.-H., Kim, S.-H., Kim, H.-W., Kwahk, K.-Y., 2004. Knowledge based decision making on higher level strategic concerns: system dynamics approach. Expert Systems with Applications 27, 143-158.