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CHAPTER 1 and 4

The document discusses logistical challenges in Vietnam's coffee supply chain and proposes a mathematical model to optimize warehouse location and transportation routes. It aims to minimize overall logistics costs by determining optimal warehouse numbers and locations while developing efficient transportation plans based on farm harvest times and storage capacities.

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Phương Phan Nguyễn Y
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12 views

CHAPTER 1 and 4

The document discusses logistical challenges in Vietnam's coffee supply chain and proposes a mathematical model to optimize warehouse location and transportation routes. It aims to minimize overall logistics costs by determining optimal warehouse numbers and locations while developing efficient transportation plans based on farm harvest times and storage capacities.

Uploaded by

Phương Phan Nguyễn Y
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER I: INTRODUCTION

1. Motivation:

Vietnam's coffee industry stands as a pivotal export commodity, constituting 3% of the nation's

GDP. As the world's second-largest exporter of coffee and the leading exporter of Robusta

beans, Vietnam plays a crucial role in the global coffee market. The International Coffee

Organization's 2022/2023 Annual Review reported a coffee output of 29.75 million bags, with

over 95% being Robusta, of which Vietnam contributes more than half of the global Robusta

supply.

Preliminary statistics from 2022 reveal that Vietnam's coffee cultivation spanned approximately

710,000 hectares, yielding over 1.84 million tons, with an impressive productivity of 28.2 tons

per hectare. Notably, the Central Highlands region, encompassing five provinces, accounted for

91.2% of the nation's coffee cultivation area and 93.2% of its total coffee production. Among

these provinces, Dak Lak, Lam Dong, Gia Lai, and Dak Nong dominate Robusta cultivation,

covering approximately 90% of the nation's coffee-growing area, totaling around 550,000

hectares.

The coffee supply chain in Vietnam faces logistical challenges, primarily attributed to the

dispersed nature of small household coffee growers. This results in increased transportation

costs, which constitute a significant portion (20-25%) of the overall logistics expenses. The

variability in harvest times across different farms necessitates customized collection schedules,

further complicating logistics operations.


To address these challenges, this paper proposes a three-echelon network design utilizing a

Mathematical Integer Linear Programming (MILP) model to tackle the location-inventory-route

problem. By integrating strategic decisions regarding warehouse selection, location optimization,

and tactical decisions involving transportation and storage management, this model aims to

optimize logistics operations while accommodating the varying harvest times of coffee farms.

2. Problem Statement – The Need of Study:

The existing system comprises three stages: Suppliers (farmers), warehouses (locations for raw

material collection), and a single processing plant. The process begins with farmers harvesting

their crops at different times. Once harvested, collectors visit the farms to gather the produce,

which is then transported to the warehouses for storage. Finally, the raw materials are transported

from the warehouses to the processing plant for further processing.

The current system faces two primary challenges.

- Transportation Costs Due to Varying Harvest Times:


o Diverse harvest times among farmers necessitate multiple collection trips,

increasing transportation expenses.

o Inefficient route planning further elevates transportation costs, affecting overall

logistics expenditures.

- Underutilization of Warehouse Facilities:

o Inefficient use of warehouse space leads to fixed costs regardless of storage

volume, raising operational expenses.

o Reduced inventory turnover due to underutilization increases holding costs and

affects transportation efficiency.

These issues collectively contribute to higher overall logistics costs, impacting the

competitiveness and profitability of the coffee supply chain. Thus, the optimization of

warehouse selection, transportation routes, and inventory management is imperative to

address these challenges effectively.

3. The Design Project Objectives and Requirements

This study aims to:

- Determine optimal number and location of warehouses.

- Develop efficient transportation plans based on harvest times and storage capacity.

- Minimize overall logistics costs (transportation cost for each route, storage costs, and

fixed cost of opening, maintaining or closing warehouses)

The design requirements center on optimizing warehouse operations and enhancing

transportation efficiency. Warehouse optimization involves ensuring adequate capacity and


strategic location to minimize transportation costs. Transportation efficiency focuses on

developing optimized routes and schedules to minimize logistics costs.

4. Scope and Limitations:

Scope:

The project focuses on the supply chain of Robusta coffee beans from the Central Highlands of

Vietnam. It encompasses a single mode of transport, specifically road transportation, and

involves three stages: from suppliers (farmers) to warehouses and finally to the processing plant.

Limitations:

The project does not consider factors such as damage or loss of goods during transportation,

operation costs at warehouses, or workforce-related expenses. These aspects are excluded from

the scope of the project.

5. Project Plan
CHAPTER IV: PROTOTYPE DEVELOPMENT AND IMPLEMENTATION
Ref:

https://www.gso.gov.vn/tin-tuc-khac/2023/02/xuat-khau-ca-phe-diem-sang-trong-nhieu-thach-

thuc/

https://baochinhphu.vn/xay-dung-chuoi-nganh-hang-ca-phe-viet-nam-chat-luong-cao-

102230312155540856.htm

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