The application of simulated annealing method in optimizing profit-loss sharing ratio with Vasicek model

Abstract

Profit-Loss Sharing (PLS) model is one of sharia economic model based on revenue-sharing system in the Musyarakah contract, where both of involved parties, the investor and market trader, contribute the capital of business. The purpose of this research is to determine the optimal ratio (nisbah) of PLS so that both investor and the trader can get optimal profits. Firstly based on a quite few data of sales profits of traders in a traditional market in Indonesia, we need to generate more data using the Bootstrap method for the simulation of models of usurer and PLS from Sumarti (2015). These models also require a prediction of Bank Indonesia (BI) interest rates using Vasicek method. Having had the various simulations on MATLAB, the result of the PLS model shows that the investor's profit in PLS model is smaller than the profit of the usurer’s profit, and the profit of the trader in PLS model is greater than the trader’s profit in the usurer model. The optimum ratio of PLS based on the simulations using the existing data are from 0.0003 to 0.0191.