Optimization model framework for coordinating farmers and a cooperative in the gambier supply chain

Abstract Gambier is a leading commodity in West Sumatra, Indonesia. Gambier products are produced by small farmers and sold to collectors (middlemen). However, farmers’ bargaining power is relatively weak compared to buyers’ bargaining power which can determine the price of gambier. To overcome this, the participation of gambier cooperatives is expected to improve the farmer’s bargaining position and income. This study aimed to develop an optimization model framework to coordinate farmers and a cooperative in the gambier supply chain. This study analyzed the gambier supply chain in Lima Puluh Kota Regency, West Sumatra. In the first stage, the existing gambier supply chain system was identified and analyzed including the structure, actors involved, mechanisms implemented, and inequalities that occurred. This study encourages the operation of gambier cooperatives to help farmers with the problems they face, in addition to being able to produce gambier products with better quality and value and also assist in marketing. Therefore, the transaction relationship between gambier farmers (suppliers) and cooperatives must be studied, especially regarding their coordination mechanisms. In the second stage, optimization models based on linear programming and mixed integer linear programming were developed to optimize planning in farmers and cooperatives, in terms of tactical and operational decision-making. The coordination mechanisms required between farmers and cooperatives are explained to optimize their profits and meet the demand for gambier.