Inventory Dissipation in the Japanese Wholesale Salmon Market

Many fisheries are characterized by a brief and concentrated harvest period followed by a longer marketing period during which the stored product is sold out of inventories. This paper develops an economic model ofoptimal inventory dissipation for a semi-perishable product which assumesthat decision makers plan allocations of inventoried product to the wholesalemarket over the marketing period in a way that maximizes expected net returns.The model is applied to the Japanese wholesale salmon market. The Japanese market fits the characteristics described above in that inventoried holdings of frozen salmon are established to a large extent from imports during a relatively brief period corresponding to concentrated runs of sockeye salmon in Alaska. Results indicate that supply behavior from inventory stocks can be explained by current and expected future prices, the opportunity cost of holding stocks, the length of time left in the marketing horizon and the level ofcurrent inventory.