RMIT International University Vietnam
Assignment 2 (Individual): Literature Review
OMGT2277
Subject Code:
Supply Chain Analytics
Subject Name:
RMIT Vietnam , HCMC
Location & Campus
Student Name: Nguyen Hoang Di Hao
Student Number: S3836246
Your Teacher: Son Nguyen
Word Count: 3000
I declare that in submitting all work for this assessment I have read, understood and agree to
the content and expectations of the Assessment Declaration
I. Introduction
Consuming fruits regularly is strongly recommended in several countries worldwide, owing to its
substantial concentration of essential vitamins, dietary fibers, and minerals (Nguyen et al., 2021).
Therefore, there is a growing market demand for fruit, both for direct consumption and for use in
the food industry (Jacobsen 2017). Vietnam, a country with advantageous conditions for fruit
cultivation, achieved a fruit and vegetable production of 2.19 million metric tons (Mordor
Intelligence 2020). In Vietnam, the combined area of fruit crops exceeds 800,000 hectares, with
a production of more than 7.5 million tons. The Mekong Delta region is the primary location for
fruit production (Truong 2017).
Fruit is characterized by its high likelihood of spoiling quickly. Therefore, it is crucial for the
supply chain to facilitate efficient transit of fruit from producers to end customers while ensuring
the best possible conditions. Nevertheless, the fact that it can easily spoil has resulted in the
supply chain being vulnerable to risks and uncertainties caused by external variables (Waqas et
al., 2020). Nguyen et al. (2021) emphasized that creating a management plan for the production,
distribution, and pricing of fresh fruits is exceedingly challenging due to their limited shelf life,
seasonal output, and unpredictable fluctuations in price and demand. Consequently, several
mathematical models have been created to enhance the efficiency of the fruit value chain.
Therefore, this article is dedicated to examining the Vietnamese fruit supply chain and its
existing challenges. Twenty peer-reviewed articles have been analyzed to examine the use of
mixed integer linear programming and simulation models in addressing issues due to its
optimization capabilities and ability to simulate uncertainty. Fruit consumption is strongly
recommended regularly in several countries worldwide due to its rich concentration of essential
vitamins, dietary fibers, and minerals (Nguyen et al., 2021). Therefore, the market demand for
fruit is growing, as it is being consumed directly and used in the food business (Jacobsen 2017).
Vietnam, benefiting from a range of advantageous factors for fruit production, achieved a fruit
and vegetable production of 2.19 million metric tons (Mordor Intelligence, 2020). In Vietnam,
the combined area of fruit crops exceeds 800,000 hectares, with a production of more than 7.5
million tons. The Mekong Delta region stands out as the primary area for fruit production
(Truong 2017).
Fruit is characterized by its high likelihood of perishing, making it essential for the supply chain
to facilitate efficient transportation from producers to end customers in the best possible
conditions. Nevertheless, the perishable nature of the product has exposed the supply chain to
various risks and uncertainties arising from external sources (Waqas et al., 2020). The study
conducted by Nguyen et al. (2021) emphasized the immense challenges in formulating a
management plan for the production, distribution, and pricing of fresh fruits. These challenges
arise due to the limited duration of their shelf life, the seasonal nature of their production, and the
unpredictable fluctuations in both price and demand. As a result, several mathematical models
have been created to improve the efficiency of the fruit value chain.
Therefore, this article aims to examine the Vietnamese fruit supply chain and its existing
challenges. Twenty peer-reviewed studies have been analyzed to address the difficulties by
utilizing mixed integer linear programming and simulation models. These approaches were
chosen for their optimization capabilities and capacity to simulate uncertainty.
II. Supply Chain Design
The fruit supply chain in Vietnam is characterized as lengthier and more complex compared
to other industrialized nations due to the presence of numerous intermediary nodes involved
in the network as a result of traditional trade practices (Nguyen et al., 2019). Considering
this, there exist numerous variations of value chains within the Vietnamese fruit business.
However, Figure 1 illustrates a standardized fruit supply chain consisting of five stages:
Inputs, Harvest, Purchasing, Processing, and Market.
Figure 1: Typical fruit supply chain model in Vietnam (Trang, K 2020)
A) Product flow:
After the fruit is picked, it will be transported from the plantation to the traders, and then to the
processing and exporting enterprises. Subsequently, this range of products is distributed to
customers within the country and also exported to other markets. As depicted in Figure 1, cash
flow will be transferred from both local and abroad buyers to farmers in a reciprocal manner.
Finally, the transmission of information facilitates the precise synchronization of operations and
enhances the effectiveness of work procedures.
B) Explain stakeholders:
The fruit supply chain consists of essential connections that need to be defined based on the
description of how the product moves. Suppliers of raw materials, harvesting, procurement,
processing, and end customers. It must undergo a certain process involving five stakeholders
before it may be received by the final consumer: Inputs refer to the resources or materials used in
agricultural production, such as seeds. Farmers are individuals who cultivate crops or raise
livestock. Merchants are individuals or businesses involved in buying and selling agricultural
products. Processors are entities that transform raw agricultural products into processed goods.
Wholesalers are individuals or companies that purchase goods in large quantities and distribute
them to retailers.
1) Suppliers providing inputs
As stated by Brian Barth (2018), suppliers have a crucial role in supplying farmers with
high-quality seeds and fertilizers. These establishments can be either fertilizer stores,
research organizations, or seed banks, but they are required to obtain clearance from
Vietnamese farmer councils.
2) Agriculturalists
Mr. Duong Quoc Doan, the head of the Vietnam Farmers' Union, states that Vietnamese
farmers are overseen by the Vietnam Farmers' Union. This organization plays a vital role
in ensuring that the fruit supply chain meets the necessary standards for sanitation, safety,
and quality before the fruit is delivered. Annually, the group will provide farmers with
suggestions regarding the quantity and variety of crops to plant, taking into account the
prevailing agricultural market conditions (Harm van Rees, 2014).
3) Merchants/Traders
They function as intermediate substances in the Vietnamese fruit supply chain. As
previously mentioned, all their actions must be regulated by the Vietnam Farmers'
Association. Sometimes, mistakes in management occur, leading to fruits that do not
meet the required quality standards (Frederick Lamster, 2016).
4) Processing/Export Department
These are businesses that may be privately owned or state-managed, with the purpose of
coordinating, overseeing, and connecting with each phase of the supply chain. Business
establishments can distribute items locally either through their own storefronts or by
using a third-party to export them to foreign nations, depending on their capability.
5) Merchants
Retailers play a crucial role in preserving and distributing fruit to consumers. They serve
as a vital connection between consumers and products by utilizing advertising and
offering a diverse range of items, pricing, and services to attract clients.
6) Customers within the country
Consumers drive market demand and produce money for the whole fruit supply chain.
7) Manager responsible for overseeing the supply chain
Supply chain managers are responsible for coordinating and linking all entities involved
in the fruit supply chain, including as research organizations, universities, government
agencies, and export processing enterprises.
In addition, they serve as custodians, clearly delineating the role of village leaders at
every stage, with a primary focus on establishing locations that facilitate the production
of raw materials for the cultivation of fruits.
C) Issue in the fruit supply chain Supply chain inefficiencies
As mentioned before, the fruit supply chain in Vietnam still has some vulnerabilities due to the
traditional practices followed by the community during fruit transportation. Firstly, the initial
figure represents a standardized characteristic of supply chain management businesses. People's
impromptu business models still indicate unpredictability rather than concern for fruit quality,
which is systematically examined and controlled through high-priced agreements (Page K,
2020).
Moreover, the most arduous component of the Vietnamese fruit and vegetable industry is the
pre-processing and preservation. Vietnam's tropical fruit has a short shelf life and requires a
significant amount of time to be transported to international markets (Thuan, Q. et al., 2022).
Furthermore, the discrepancy in the quantity of fruits in each region poses a significant issue. As
to the Ministry of Agriculture and Rural Development, the origin of agricultural products is in
danger of becoming outdated, and there is often a scarcity of fruits. There is a situation of
congestion in one location and paucity in another (Bang, H. 2021). The aforementioned dilemma
can also be attributed to inefficient supply chains. Trung Chanh (2022) reports that around 80%
of the gathered fruit will be kept for internal consumption and sold at lesser prices compared to
agricultural items that are exported. Moreover, the word 'ripe fruit,' denoting fruit that is at its
peak of deliciousness for consumption, is highly complex for each fruit type and relies on the
skill of farmers (Lap, H. 2019). The level of ripeness at harvest can potentially affect the quality
of the fruit, leading to inconsistencies.
Furthermore, as stated in the Enterprises and Trade Liberalization report, the United States has
authorized import permits for six varieties of Vietnamese fruits, namely mango, longan, litchi,
dragon fruit, rambutan, and breast milk (Center of WTO). This development presents fresh
prospects for farmers to access the market of the United States. Nevertheless, the transit phase
has numerous challenges stemming from inadequate infrastructure and transportation methods,
leading to fruit damage upon arrival (The Vinh, 2021). Essentially, Vietnam's fruit supply chain
is severely limited, leading to significant cost escalations at every stage.
Empty bullet point Fruits are deficient in the capacity to rival other nations.
As mentioned before, fruit is extremely susceptible to decomposition due to factors such as
bacteria, storage conditions, temperature, and humidity (Fabian ObsterHeidi, BohlePaul and M.
Pechan, 2023). Moreover, any negligence at any phase, such as packaging, transportation, or
storage, will lead to a decline in the quality of the product. Amidst the COVID pandemic, China
implemented stricter quarantine measures at its northern border crossings. Consequently, farmers
in the southern region faced difficulties in exporting fruit due to a decline in fruit quality. As a
result, their access to international markets became constrained (Ba Ria Economic, 2022).
Moreover, as a consequence of atypical weather conditions, exorbitant costs of fertilizer, and
high labor prices, gardeners are reluctant to invest in enhancing the caliber of fruit trees, leading
to a decline in competitiveness vis-à-vis other count
Conversely, the fruit industry in Vietnam is predominantly non-automated, leading to product
wastage due to manual handling, namely the absence of proper packing protocols (Chuong
Phuong, 2022). Based on a survey done by the Economic Cooperation and Rural Development
Board, the mechanization of tillage in fruit tree production surpasses 90%, the care aspect
exceeds 70%, and the processing aspect exceeds 90%. Hence, post-harvest preservation
constitutes around 20% of the total (Chuong Phuong, 2022). Consequently, all components of the
supply chain suffered substantial financial losses, including fruit and vegetable businesses,
traders, and even farmers.
III. Supply Chain Analysis
3.1. Simulation
Simulation is the initial mathematical approach used to evaluate issues in the fruit supply chain.
It is chosen for its capacity to account for uncertainties and risks in the fresh produce value
chain, as well as its adaptable modeling capabilities for use in decision support systems (DSSs)
(Leithner & Fikar, 2019).
Academic works have addressed the issues associated with using simulation models. Generally,
they mostly discussed the risks and uncertainties that arise throughout the entire value chain.
Leithner and Fikar (2019) conducted a study on the difficulties faced in preserving the superior
quality and value of fresh fruits during transportation from rural producing areas to metropolitan
regions. The challenges of transporting fresh fruits in daily logistics operations, as discussed by
Fikar (2020), involve uncertainties related to demand, supply, and quality variations. These
uncertainties further complicate the selection of an inventory control policy, as highlighted in the
study by Napitupulu and Hadiguna (2018). A separate study focused on developing an efficient
value chain by creating packaging for loose-packed products that ensures consistent fill weight
and volumetric efficiency throughout the whole value chain (Olatunji & East 2019). In addition,
Vostriakova et al. (2021) conducted a study that examined the problem of waste resulting from
inadequate transportation infrastructure and ineffective management of the horticultural supply
chain. In addition, another paper endeavored to identify strategies for achieving equilibrium
between expenses, product excellence, and environmental considerations (Fan et al. 2021).
Simulation is utilized to analyze the pallet movement at ports and its impact on the storage
capacity of the cold chain facility (Bekker, Mostert & Dyk 2005).
According to Tako & Robinson (2012) and Sumari et al. (2013), simulation is commonly
employed to illustrate the actual occurrences in a logistics system or to assess scenarios that are
created using different input assumptions in supply chain management. To be more precise, it
computes the outputs by taking into account the inputs that include parameters and random
variables.
In their study, Vostriakova et al. (2021) clarified that simulation implementation involves
constructing a mathematical model of a system that precisely describes how the system's
attributes are affected by the values of random elements. Subsequently, the probability
distribution for random elements is established based on the law of probability. The subsequent
actions involve determining the scope of values for each stochastic variable, generating random
values within a specified range for these variables, conducting multiple simulation tests to
observe the behavior of the system, and ultimately assessing the characteristics of the system.
Ultimately, the acquired outcomes are assessed. Simulation is mostly used in the fruit industry to
minimize the deterioration of fruit quality during the operating and distribution phases after
harvesting (Leithner & Fikar, 2019). More precisely, its use in examining different situations and
evaluating how they affect overall logistics expenses, emissions, and the quality of perishable
products in order to offer the most high-quality, cost-effective, and environmentally friendly
solutions. In addition, Kanchanasuwan (2018) emphasized the use of simulation in the decision-
making process for designing a low-cost, low-tech cold chain system for highly perishable fruits.
Despite its achievements, simulation also has limits that are addressed. One significant limitation
of simulation is the difficulty of accurately determining real-world facts in the fruit sector, such
as agricultural inputs and long-term production. Hence, the many scenarios have the potential to
exert influence, resulting in outcomes that are not correct (Neuwirth et al., as cited in Cooper et
al., 2021).
3.2 Mixed-Integer Linear Programming (MILP):
Mixed-Integer Linear Programming (MILP): is a mathematical optimization technique that
involves solving linear programming problems with the additional constraint that some or all of
the decision variables must be integers.
Ivan Kantor et al. (2020) propose that the MILP model and approach can enhance the ability to
address intricate design, planning, and operational difficulties. This is achieved by incorporating
the principles of process integration problems, incorporating exchange restrictions, and defining
the problem across various time scales. The study has been conducted on several fruit industries
located in the Mekong Delta region of Vietnam (Kim Cuc, 2019). Based on this rationale, a
mixed integer linear model (MILP) is employed to select the plant location and determine the
quantity of transportation required for components in the supply chain.
The MILP technique is very suitable for addressing the current challenge faced by the
Vietnamese fruit sector, which is to enhance quality and reduce prices through improved
production and distribution. Jabarzadeh (2020) states that MILP is employed to enhance work
efficiency in the supply chain from an economic perspective. Moreover, as stated by Luca
Moretti et al. (2021), MILP is an algorithm that consists of decision variables that are
approximated output values, which aid users in making informed decisions. When applied in the
fruit supply chain, it is crucial to determine variables such as transportation expenses, pre and
post-harvest fruit volume, and lead time for ordering. Subsequently, the algorithm will calculate
the desired demand to be fulfilled. Jabarzadeh developed a mixed integer linear programming
approach to address the cost, carbon dioxide emissions, and consumer expectations of different
segments (forward and reverse flow) in the fruit sector. This method aims to identify the optimal
location for the base site. MILP also seeks to improve the planning of transportation after the
harvest (Esteve Nadal, Llus M. Plà 2015).
However, it is crucial to note that this method does have specific limitations, as highlighted by
Luca Urbanucci (2018). These limitations include the inability to consider non-linear effects, the
necessity to assess all time periods simultaneously, and the potential for complex risks in high
dimensions. Moreover, the assumption becomes dubious when applied in a country like
Vietnam, which has numerous variables. Consequently, the algorithm's output may not meet the
requirements for practical application.
The MILP problem is being studied in the context of the fruit supply chain.
The decrease in economic activity resulting from subpar product quality and an ineffective
distribution strategy in the fruit business is giving rise to a multitude of problems.
As per the studies conducted by S. Belil et al. (2018) and Neale R. Smith et al. (2021), MILP
(Mixed Integer Linear Programming) is capable of addressing several aspects of the supply
chain, such as production planning, fruit quantity for export or import, shipping, warehousing,
order requirements, and other related factors. In addition, Rahbari, M. (2022), and Jabarzadeh
(2020) argue that the successful development of a sustainable fruit industry requires the
utilization of Mixed Integer Linear Programming (MILP) in the creation of distribution centers,
implementation of scheduling support algorithms, and management of production and packaging
processes. Subsequently, all issues within the fruit supply chain that adversely affect production
and distribution costs will be effectively resolved.
Utilizing Mixed Integer Linear Programming (MILP) can lead to the development of an optimal
harvesting strategy that maximizes profitability. This algorithm also facilitates distribution
planning, hence minimizing expenses and time required for the harvesting and shipping
processes. In addition, MILP will aid in determining the harvest time by employing component
data such as the type, shape, and size of the fruit, as well as external factors like temperature. The
primary objective is to reduce post-harvest losses in order to maximize overall profitability, total
revenue from fruit production, and total expenditures associated with harvesting and
transportation. Additionally, it is necessary to determine the processing plant's restricted
capability and the present availability of fruit. Additionally, this approach serves as a highly
effective method for predicting and managing the supply and demand of fruits, resulting in cost
savings during the distribution process in Vietnam.
IV. Summary of Findings
Based on 20 peer-reviewed articles, this report conducted a literature review concentrating on the
application of MIP and simulation models within the fruit value chain. The review yielded the
following noteworthy findings:
Leithner and Fikar (2019) created a simulation-based decision support system (DSS) that
emphasizes the need of combining routing and inventory techniques. The system also
demonstrates the advantages of using real-time quality data to reduce fruit losses and
overall expenses.
In a similar vein, Fikar (2020) presented the notion of model-driven decision support
systems (DSS), which revealed that decisions about service offerings, inventory
strategies, and distribution planning are intricately linked in the fresh produce value
chain. The author also highlighted the tradeoff between minimizing transport lengths and
reducing quality losses during last-mile delivery by taking into account uncertainties in
the supply chain of fresh fruits and vegetables.
In their 2021 study, Fan et al. also presented a similar trade-off, namely in relation to the
reduction of energy use while preserving fruit quality. Integrating quality control with
logistical operations might potentially reduce operating costs and emissions. However, it
is important to note that this integration may have an impact on the overall quality of the
products compared to a quality management system implemented after transportation.
Van der Zee and Van der Vorst (2009) conducted a simulation study to examine how
modifications in the distribution process affect the preservation of fruit quality and
sustainability measures.
Vostriakova et al. (2021) employed simulation modeling to illustrate the potential
outcomes achieved, particularly the economic impact resulting from enhancing the
distribution system.
Kanchanasuwan (2018) devised an inexpensive and technologically simple method for
designing cold chains and assessed its viability using computer simulation.
Kodrat, Napitupulu, and Hadiguna (2018) utilized simulation to forecast fruit revenue
and production in order to determine the replication strategy for future years.
Cooper et al. (2021) conducted research that introduced a system dynamics modeling
framework to examine the trade-offs in the supply chain resulting from improvements,
with the goal of optimizing fruit availability in small retail-focused markets.
Olatunji & East (2019) utilize simulation to enhance box designs, ensuring uniform fill
weight and volumetric efficiency throughout the value chain. The study conducted by
Bekker, Mostert & Dyk (2005) demonstrated that the simulation model underwent
thorough verification based on a wide range of criteria. This enabled the model to
accurately estimate the current cold storage capacity and assess the need for additional
capacity.
Phan and Ho (2020) introduced the MIP model as a means to enhance the decision-
making process in planning, transportation, and distribution with the goal of maximizing
revenues.
Both the 2014 and 2016 studies on Limpianchob focused on reducing the overall cost and
utilized the MIP model in order to assess the production capacity of the facility.
However, an article published in 2016 also presented novel discoveries regarding the
processing plant that has a solitary processing line.
In contrast to the other articles, Jena and Poggi (2013) used MIP to calculate the optimal
time for harvest, aiming to maximize the sugar content in cane and increase profit.
The article authored by Amorim, Günther, and Almada-Lobo in 2012 aims to achieve
two main objectives: increasing the shelf-life of items delivered to customers and
lowering overall expenses. To do this, the authors developed a mathematical optimization
model known as a Mixed Integer Programming (MIP) model. This model integrates
concerns of product freshness with planning for production and distribution.
Catalá et al. (2016) emphasized the tradeoff between client discontent and expenditure
reduction. Therefore, they developed a model to assist in the design of network
infrastructure, which allows for the quantitative evaluation of both criteria.
The MIP model presented in the paper by Maia, Lago & Qassim (1996) was used to
assist in facility planning and preliminary design. It helped in selecting routes,
determining operational installation, capacity, and crop distribution for different
scenarios.
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