Production Failure Risk Analysis and AHP-Based Decision Making For Mitigation Strategy Selection in Layer Poultry Farming

Abstract

Layer poultry farming in Indonesia face recurring production failures with severe financial consequences. This research investigates PT RHA which recorded 30 to 35 percent decline in egg output during the Q1-Q2 2023. The study aims to: (1) financially quantify the production failures using the Cost of Failure, Value at Risk, and Risk-Adjusted Return on Capital and (2) prioritize mitigation strategies through the Analytic Hierarchy Process.  The research adopts a mixed-methods explanatory case study design. Primary data were collected through semi-structured interviews and financial records from January 2021 through December 2024. The Cost of Failure analysis revealed that the total losses reached Rp 1,535,200,000. The VaR analysis produced a CvaR at 99 percent confidence of Rp 350,000,000, which was adopted as the recommended minimum capital buffer. Baseline RAROC stood at 21.4%, rising to 101.7% under the primary strategy. AHP analysis (CR =0.0099< 0.10) ranked the Preventive and Risk Elimination Strategy (A1) as optimal intervention with a composite score of 0.4843. This research demonstrates that integrating quantitative financial risk with AHP produces a defensible, evidence-based prioritisation framework for resource-constrained farm management. The findings may be applicable to similar layer operations across Indonesia and provide solid methodological framework agribusiness risk management studies.