INBOUND SUPPLY CHAIN NETWORK DESIGN FOR COFFEE PROCESSING: ALEMAYHU YIRDAW COFFEE PROCESSING PLC.

Abstract

Coffee is the most important export for the country, accounting for about 34 percent of the value of all exports in 2017/18. However, coffee farmers in producing area are operating at a loss due to selling at low prices to intermediaries who control the downstream channels. The correct transporting and processing of beans are a precondition for good quality coffee which might achieve a higher price. Drying in backyards without any equipment often compromises the quality. Therefore, to provide higher income to coffee farmers, effective integration of downstream operations is vital. This inbound supply chain network design should include the intermediate processes and transportation of coffee from primary market in each kebele to processing plant. The objectives of the thesis was to develop a mathematical model that selects the best supply and drying facility option for coffee product in the coffee processing industry; develop network design optimal cost of coffee drying facility and to identify and describe the key steps in the supply activity and coffee processing facility. In order to address the objectives of the research used questionnaire, interview, experiment and observation to collect data from different primary source of data. On the other hand, assessment of documents or reports of the transport cost, warehouse cost, and inventory cost, drying material cost and labor cost. The model is illustrated using a combination of real and simulated data from the coffee sector. To address the issues of limited plant capacity and increased delivery lead times, including a warehouse located closer to the plant is proposed. The selected options have an influence on the delivery lead time, because delivery lead times should not exceed that assured to processor, which impose restrictions in the model on delivery lead times for maintain the quality of coffee product. An alternative to improve the drying process has been the use of solar energy with solar dryers. Area limitation was used as a constraint in this optimization problem. The results of the optimization model indicated that the total production and transportation costs of the network can be reduced by 5.48% to 13.45%. And also the model selected greenhouse solar dryer facility for dry coffee parchment due to area limitation of the constraint which avoid congestion and mould formation for maintain the quality of coffee product