Optimizing Profit and Reducing Waste in Small-Scale Coconut Oil Industry: A Goal Programming Model
Abstract
The small-scale coconut oil agro-industry supports rural economic development but faces key challenges such as fragmented processing, underutilized biomass waste, and limited integration with circular economy practices. This study proposes a multi-period goal programming model to optimize an integrated coconut processing system by balancing profit maximization, input supply stability, waste minimization, and inventory control in line with circular economy principles. The model optimizes total profit while minimizing deviations from coconut input targets, reducing residual waste such as coconut shells and pulp, which are further processed into charcoal and coconut flour, and controlling excess inventory of unprocessed coconut shells over multiple periods. By explicitly modeling trade-offs among competing objectives, the framework serves as a decision-making tool for planning circular production systems in small-scale coconut oil industries in rural areas. The model is applied to a small-scale coconut oil supply chain comprising three oil units, one charcoal unit, and one flour unit, subject to constraints on processing capacity, conversion ratios, and minimum target levels. Results show that the model successfully achieves profitability and resource efficiency through optimal input allocation and waste utilization, with no deviations from input and waste targets, demonstrating its effectiveness in aligning operational and sustainability goals. This approach offers practical insights for effective resource management by guiding input planning, processing operations, and waste conversion in small-scale agro-industrial systems.
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