A study on scheduling of scrap disposal for deep-sea fishing industry using a mixed integer programming model

In Korea, deep-sea fishing industry plays an important role in a food industry. However, it is in a difficult situation because of the more competitive business environment. Therefore, there is a need to restructure the deep-sea fishing industry by scraping superannuated ships. This paper is designed to present scrap programs for deep-sea fishing industry of Korea. We performed ratio analysis to evaluate financial performance of fishing companies and then applied a mixed integer programming (MIP) model to identify optimal schedule for scraping. The results of the financial ratio analysis indicates that it is legible to provide governmental aid to Atlantic trawl, Northern Pacific trawl, and Indian ocean trawl with minimum required rate of return (MRR) of 3%, and the Atlantic strip fishing industry is qualified to receive the governmental aid with MRR value of 5%. Furthermore, by applying the MIP model to develop scrap planning, we demonstrate how our model can be used to restructure the deep-sea fishing industry of Korea.