A « Stochastic » Linear Program for The Tunisian Olive Oil Supply Chain Hatem Masri & Hanen Hamza QM350: Operations Research University of Bahrain

Introduction  Supply Chain Management  Agricultural supply chain  Tunisian olive oil  The structure of olive oil sector in Tunisia Objective of the study: Planning activities of the oil mill

OLIVE TREES CULTIVATION HARVESTING OLIVES TRANSPORT OLIVES TO THE OIL MILLS Transportation and Storage of olives CONTROL OF THE QUALITY OF THE OLIVES Weighing, Washing, Leaves removal EXTRACTION OF OLIVE OIL 1.The classical system 2.The pressure system 3.The Continuous process with 3 phase decanters 4.The Continuous process with 2 phase decanters. THE SOLID-LIQUID SEPARATION PROCESS BY PRESSURE OR CENTRIFUGATION OLIVE OIL STORAGE OLIVE OIL CONDITIONING DISTRIBUTION OF OLIVE OIL OLIVE OIL SUPPLY CHAIN CRUSHING THE OLIVES WITH PITS MIXING OLIVES AND PITS TO CREATE OLIVE PASTE LIQUID-LIQUID SEPARATION PROCESS BY DECANTATION AND CENTRIFUGATION

Surface: 1.6 million hectares, 35% of cultivable lands 57% of total agricultural farm labour. Oil mills: 1600 units CS: 840, PS: 318, CP:320, MS: 111 Triturating capacity tons/ Day The storage capacity: 300 thousand tons The total production of olive oils 173 thousand tons National Office of Oil (NOO) (70% of the production) Private exporters (21% of the production) Conditioning units (9% of the production) External market 66,5% of the production Interiors Market +stock 33,5% of the production Tunisian Olive Oil Sector The classical system (CS) The pressure system (PS) The continuous process (CP) The mixed system (MS)

Problems Of the Tunisian Olive Oil Supply chain (1)  The Problems Of Olive Harvest: Lack of specialized labor increases the harvesting duration (till may) and the beating down damage olives Climate scarce and irregular rains Mechanical harvesting of olives will be essential in order to reduce the time of harvest according to the size of the Tunisian olive tree and so avoid the problem caused by the shortage in labor.

Problems Of the Tunisian Olive Oil Supply chain (2)  Problems Of Olive Oil Production: The increase in the olive oil production cost Price of olive is unstable. Quality of Olives Storage capacity of olives and olive oil Regression to the position of Tunisian olive oil on the world market.  Encourage investment on olive oil mills to increase the extraction capacity of olive oil.  Create a label of quality for the Tunisian olive oil.

Problems Of the Tunisian Olive Oil Supply chain (3)  Problems Of Olive Oil Distribution About 90% of Tunisian olive oil exports are in a bulk. Traditional Market: 87% of Tunisian olive oil exports are to Italy and Spain. Low Competition Capacity of the Tunisian Exporters. Internal Market Supply chain is not Optimized Optimize the olive oil production chain

The Olives U1U1 UmUm The units The olive oils Demand Model Constraints

A stochastic linear program to the olive oil production chain

The Recourse Approach where is the quantity of shortage on demand

The LP Certainty Equivalent

Empirical Study: RUSPINA  RUSPINA was created after the liberalization of the olive oil sector in Tunisia.  Major player in the olive oil sector and especially in the export of the virgin olive oil to the United States and Europe.  Uncertainty on the demand from national and international olive oil markets  RUSPINA has to plan its production during the olive oil production period (4 months from November to the end of February) to satisfy the random demand.

RUSPINA Production Chain  RUSPINA has two olive oil production units with a continuous process. The first unit uses a three- phase decanter and the second a two-phase decanter.  The company can increase the production by using two additional units, the first with a traditional system and the second with a pressure system  Storage capacity is equal to 5000 Kg of olives  The company produces 4 types of olive oil: extra- virgin olive oil, fine virgin olive oil, semi-fine virgin olive oil and lampante oil

Olives  In the local market, there are seven varieties of olives, namely Chemlali, Chemchali, Chetoui, Oueslati, Zalmati, Sayali and Gerboui  To reduce the size of the study, we limit ourselves to three scenarios: Weak production of olive oil. Medium production of olive oil. High production of olive oil.

Opimization Solver  Using data collected from RUSPINA, we solved the linear program using LINGO 9 optimization solver. The optimal solution values give the company more than 12% additional profits.  The traditional system has never been used along the production period (120 days). Units of triturationNumber of days used Traditional0 Pressing40 Three-phases decanters97 Two-phases decanters80

Quantity of Olives to Purchase and Store

Percentage of Varieties of Olives Crushed

Expected Quantities of Supply and Demand

Conclusion and Perspectives  Tunisian olive oil sector: the non efficiency of traditional production units compared to other production units. the importance of some olive varieties as the chemchali and sayali varieties that we must encourage farmers to plant olive trees from these two varieties  RUSPINA needs to Increase its storage capacity of olives oil and, therefore, makes profit from an expected low price of olive oil; Sign production contract with farmers to purchase olives from the two varieties chemchali and sayali; Look for a new production unit with three-phase decanters to ameliorate the trituration capacity.

THANK YOU