System dynamics modeling for evaluating the profits of the upstream supply chain of Citronella Oil

Abstract

Citronella oil is an aromatic oil obtained through the distillation of citronella stems or leaves. In Indonesia, the distillation process is predominantly carried out by small to medium-sized enterprises. Enhancing the reliability of the citronella oil supply chain has the potential to increase the profits of farmers and distillers. However, farmers and distillers in Indonesia face the challenge of fluctuating prices for citronella oil, leading to a decline in profits. This research aims to model the upstream supply chain system of citronella essential oil. The study has identified the key stakeholders involved in the citronella oil supply chain through a causal loop diagram, employing a system dynamics approach. The recommended scenario involves adding an essential oil processing industry as an additional participant in the citronella oil supply chain network. The simulation model's results over the period from 2023 to 2027 indicate an increase in profits for each stakeholder in the upstream citronella oil supply chain. The total profit of the upstream supply chain amounts to USD 2,284,829, representing a 52.3% increase.