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Supply chain is now a core business improvement effect form most companies as senior
management directive in that area becoming common place. Supply chain optimization
has emerged as a central objective for an organized effort enhances quality moved
logically to logistics and distribution, and then to total supply chain performance (Charles
C. perior and Michael baver, 2006). A company’s supply chain structure depends on the
maturity of their markets, products, and customer relationship. A start-up group may to
have to begin with loss virtual chain where, there is no formal long term supplier
organization (someerkumar and willian A. krobb, (2005).
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1.2. Statement of problem
There is a close connection between the design and management of supply chain flows
(product, information, and funds) and the success of the SC (Chopra, and peter, 2007).
The study shows that the success and failurity of the company is depend on supply chain
decisions (onlinesc.com).
Tomas, et al. (2010) conducted a research on Risk, uncertainty and supply chain
decisions. The result shows that bad supply chain decision led to crisis, similarly poor
design and manufacturing decision created loss to the company. The companies like Wal-
Mart who is the known world retail company, Dell computer company who is known by
its computer production and others that built their success on superior design, planning
and operation of their supply chain (Chopra, and peter,2007). There are different
problems related with supply chain decisions. Among these, the first one is the problem
which is related with strategy or design, because of low level of skilled man power to
design a good strategy. The strategic decision is critical in order to stay in business
(Johnson, 2007). There is also the problems related with planning which leads the
companies to failurity and this kind of problem occurs due to the problem of
collaboration in the company and across the company. The third problem is related with
operational decisions this also leads the company to failurity because of the strategic and
tactical decisions will become to implementation through operations. At this level there
may care less ness occur and it leads the company to big problem. All the above
problems were observed from wonjishoa sugar factory and this study would conduct to
fill the gap. In this study the following basic research questions would be answered:
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1.3. Objective of the study
1.3.1. General objectives
This study aimed to assess the supply chain decision practices in WSSF
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wonji plain produced the first batch of sugar cane. Dykes, irrigation and drainage canals,
roads and bridges were built and a lot of other reclamation works were executed. As a
result, on the 20th of March 1954 wonji sugar factory was inaugurated and started
producing the first bags of sugar in Ethiopia. Soon after wonji sugar factory started
production, it was realized that in the very near future wonji alone would no longer cope
with the growing sugar estate and factory was first conceived. This project however,
necessitated an additional 1,600 hectares of land, which was then granted by emperor
Haile sellassies I. Built by the same Dutch company, shoa sugar factory which was about
7km from wonji, was inaugurated on the 10th of November 1962. Comparatively small
and yet important was the establishment of a confectionery factory in June 1961, whose
products Desta candy, 10cents retail packets of sugar and cube sugar-helped in boosting
up the seller of sugar. Through the years, since the foundation of wonji sugar factory,
Ethiopia’s sugar consumption has been swift increasing.
Vision
Mission
Create an institution that plays a major role in the national political & economic
transformation which brings rapid, sustainable and equitable growth;
Create a change and result oriented leadership and workforce with a development
mind-set, ethics and skill;
Satisfy the national sugar demand;
Support and facilitate cultural and social development around sugar development
areas;
To bring about technology transfer in sugar development sector;
Enhance the industry’s competitiveness through intercropping;
To create institutional competence capable of attaining the strategic goals of the
sugar industry;
Create compatible social and economic interlink among the public;
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Core Values
Goals
Objectives
The research study is focus only in wonjishoa sugar factory supply chain decision
making practices, so that it is not generalizable to other sugar factories.
Due to the unavailability of top officials, the study was not completed with the
schedule of researcher.
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1.8 Operational Definitions
Network;- a connected and interdependent organization mutually and cooperatively
working together to control, manage and improve the flow of materials and information
from supplier to end user.
Upstream; - means against the current and related to the relationships between the
expertise and its suppliers and suppliers’ supplier.
Downstream; - means ‘’with the current and related to the relationship between an
enterprise and customers.
Value; - is the amount buyers are willing to pay for what firm provides (porter).
Customer; - the recipient of goods and services that result from the process and activities
of supply chain.
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CHAPTER TWO
REVIEW OF LITERATURE
Introduction
Now days, supply chain is the recognized discipline to shorten cycle time, transforming
purchasing from a tactical operation to strategic sourcing, reduce inventory inventories,
decrease logistics costs and stream line communication process across a total network
from initial suppliers to final consumption and post-sale services. It is mechanisms
through diverse organizations find the way to form alliance to a new form of internet-
oriented consumer demand (Charlesc. poirer and Baver, 2002).
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called downstream (Donald, 2001). Keneth and brain; defines SC as the network of
organizations that are involved, through upstream and downstream linkages, in the
different process and activities that produce value in the form of products and services in
the hands of the ultimate customer or consumer (Kennath and Brian ,2003,). According to
William J., 2005, SC is a sequence of organization- their facilities, functions and
activities- that are involved in producing and delivering a product or service. Broadly, SC
is defined by many scholars as the network of facilities and distribution options that
performs a procurement of materials in to intermediate and finished goods to customers
(Michal H, (2006), Robert, (2006) ;…).
Objectives of SC
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Types of SC
2.2.1. Concentrated chains: founds in business such as the automotive industry that
have;
2.2.4. Service chains: that implement the mission statement of organization such as;
hospitals, libraries and banks concerned with the delivery of services, books, information,
and financial services or restaurants and cinemas delivering food and entertainment
(source: Chopra, 2007).
2.3. Flows in SC
Within SC there is a flow of information, products, and funds, through the network
involving a numbers of enterprises that have an involvement in the movement of
materials from the source to the final consumer (Chopra and peter, 2002).
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2.4. Participant in SC
SC is composed of a company and suppliers and it’s the result of complex interactions
within and between companies in relationships over time (ford et al). SC generally
contains the actors such as producers, to distributors, retailers and customers. These is the
group of participants that creates SC. in simple SC, there is the composition of company
and suppliers and customers.
2.4.1. Producers
2.4.2. Distributors
Distributers are individuals or companies that take inventory in bulk from producers and
deliver a bundle of related product lines to customers. Distributors are also known as
wholesalers. They typically sell to other businesses and they sell products in larger
quantities than an individual consumer would usually buy. Distributors buffer the
producers from fluctuation in product demand by stocking inventory and doing much of
the sales work to find and service customer. For the customer, distributors fulfill the
“Time and place” function they deliver products when and where the customer wants
them. A distributor is typically an organization that takes ownership of significant
inventories of products that they buy from producers and sell to consumers. In addition to
product promotion and sales, other functions the distributor per forms are inventory
management, ware house operations, and product transportation as well as customer
support and post -sales service. A distributer can also be an organization that only brokers
a product between the producer and the customer and never takes ownership of that
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product. This kind of distributor performs mainly the functions of product promotion and
sales. In both cases, as the needs of customers evolve and the range of variable products
changes, the distributor is the agent that continually tracks customer needs and matches
them with products available.
2.4.3. Retailers
Retailer stock inventory and sell in smaller quantities to the general public. This
organization also closely tracks the preferences and demands of the customer that it sells
to. It advertises to its customers and often uses some combination of price, product
selection, service and convenience as the primary draw to attract customers for the
product it sells. Discount department stores attract customers using price and wide
product selection. Upscale specialty stores attract customers using price and wide product
selection. Upscale specialty stores offer a unique line of product and high levels of
service.
2.4.4. Customers
Customers or consumers are any individuals or organizations that purchases and uses a
product. A customer organization may purchase a production in order to incorporate it
into another product that they in turn sell to other customer. Or a customer may be the
final end user of a product who buys the product in order to consume it.
These are organizations that provide services to producers, distributors, retailers, and
customers. Service providers have developed special expertise and skill that focus on a
particular activity needed by supply chain. Because of this, they are able to perform these
services more effectively and at a better price than produces, distributers, retailers, or
consumers could do on their own. Some common service providers in any supply chain
are providers of transportation services and warehousing services. These are trucking
companies and public warehouse companies and they are known as logistic providers.
Financial service providers deliver services such as making loans, doing credit analysis,
and collecting on past due invoices. Some service providers deliver market research and
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advertising while others provide product design, engineering services, legal services and
management advice. Still other service providers offer information technology and data
collection services.
All these service providers are integrated to greater or lesser degree in to the ongoing
operations of the producers, distributors, retailers, and consumers in the SC. Supply
chains are composed of repeating sets of participates that fall in to one or more of these
categories. Over time the needs of the supply chain as whole remain fairly stable. What
changes is the mix of participant in the SC and roles that each participant plays.
In some supply chains, there are few service providers because the other participants
perform these services on their own. In other SC, very efficient providers of specialized
services have evolved and the other participants outsource work to these service
providers instead it themselves.
Ultimate customer
2.6.1. Production
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According to (Langford, 2007),most manufacturers are compelled to plan the production
of different products during a given time frame production refer to the capacity of a SC to
make and store products .The facilities of production are factories and ware houses. The
fundamental decision that managers face when making production decision is how
resolve the trade-off between responsiveness and efficiency. If factories and ware houses
are built with a lot of excess capacity, they can be very flexible and respond quickly to
wide swings in product demand. Facilities where all or almost all capacity is being used
are not capable of responding easily to fluctuations in demand.
On the other land, capacity costs money and excess capacity is idle capacity not in use
and not generating revenue.
2.6.2. Inventory
According to (Ebert and Adam, 2001), inventory is stored of goods and stock.
Inventory is spread throughout the supply chain and includes everything from raw
material to work in process to finished goods that are held by the manufacturers,
distributors and retailers in supply chain. Again, managers must decide where they want
to position themselves in the trade-off between responsiveness and efficiently. Holding
large amounts of inventory allows a company or an entire SC to be very responsive to
fluctuation in customer demand. However, the creation and storage of inventory is a
cost and to achieve high levels of efficiency, the cost of inventory should be kept as low
as possible (chapra, 2004).
2.6.3Location
Location refers to the geographical setting of supply chain facilities. It also includes the
decisions related to which activities should be performed in each facility. The
responsiveness versus efficiency trade-off here is the decision whether to centralize
activities in fewer locations to gain economies of scale and efficiency, or to decentralize
activities in many locations close to customers and suppliers in order for operation to be
more responsive (William J., 2005).
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When making location decisions, managers need to consider a range of factors that
relate to a given location including the cost of facilities, the cost of labor, skills available
in the work force, infrastructure conditions, taxes and tariffs and proximity to suppliers
and customers. Location decisions tend to be very strategic decisions because they
commit large amounts of money to long –term plans. Location decisions have strong
impacts on the cost and performance characteristics of a supply chain. Once the size,
number, and location of facilities are determined, that also defines the number of possible
paths through which products can flow on the way to the final customer. Location
decisions reflect a company’s basic strategy for building and delivering its products to
market (Chopra, 2004).
2.6.4. Transportation
Transportation refers to the movement of everything from raw material to finished goods
between different facilities in a supply chain (Chopra, 2004). In transportation the trade-
off between responsiveness and efficiency is manifested in the choice of transport mode
there are difference is manifested in the choice of transport mode. There are different
modes of transportation which includes; rail, road, water, air, pipeline and electronics
transport. Fastest mode of transport such as air planes is very responsive but also more
costly. Slower modes such as ship and rail are very cost efficient but not as responsive.
Since transportation costs can be as much as a third of the operating cost of a supply
chain, decisions made her are every important. For instance ship (water ways), rail (rail
way), trucks, pipeline (liquids or gases such as oil and natural gas). Airplanes and
electronic transport (product, such as electric energy, data, and products composed of
data such as music, and text) a cited by Dani (20014).
2.6.5. Information
With good information, people can make effective decisions about what to product and
how much, about where to locate inventory and low best to transport it.
Information is the basis upon which to make decisions regarding the other four SC
drivers. It is the connection between all of the activities and operations in a SC. To the
extent that this connection is a strong one (i.e. the data is accurate, timely and
14
complete),the companies in a SC will each be able to make good decisions for their own
operations. This will also tend to maximize the profitability of the SC as whole. That is
the way that stock markets or other free markets work and SCs have many of the
dynamics as markets (Chopra, 2004).
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resultant strategic positioning (porter, 1985). The strategic level is characterized by
concepts such as value chain, supply network and extended enterprise (mills and schmitz,
2002). Upstream and downstream activities of the supply network are analyzed as a
whole. High level analysis is done on how the company, products and business process fit
in the overall supply network, compare their supply network analyze future threats and
opportunities, dynamics of power and dependence in the supply network, loss and
development of competences with in the supply network (mills and schmitz,2002).
Strategic decisions made by companies also include location and capacities of;-
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CHAPTER THREE
This chapter deals with the research design, sources of data, sampling and sample
technique, data collection procedures and data analysis and interpretation method.
Secondary sources ofdata: is already collected data by someone else and passed through
statistical process. This provides a good back ground of information about the subjective
understanding of the study. This kind of data sources includes books, annual reports of
the organization, journal, and brochures.
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3.3.1 Sampling Technique and Sample size
To determine the sample size the researcher would prefer a method developed by
J.Carva1ho, 984.
Sample size
Low Medium High
Population size
15-90 5 13 20
90 – 150 8 20 32
151- 280 13 32 50
281 – 500 20 50 80
501 – 1200 32 80 125
1201 – 3200 50 125 200
Source: J.Carvalho, 1984
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Data 3.5 Collection Procedures
The research carried out the following procedures:
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CHAPTER FOUR
This chapter is deals with the data presentation, analysis and interpretation that is
collected through the primary source of data. The primary data has been collected
through questionnaire distributed to the employees of WonjiShoa sugar factory
department of Logistics and supply chain staffs.
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Table 4.1 indicate that from the total participants of the study (sample size 17),
11(64.7%) were male and 6(35.3) were female respondents. This shows that in the
research both females’ and males were fairly participated. Also from the total participant
by age under20 (0%), 21-30 (4) respondents (23%), 31-40(9) respondents (53%) 41-50(2)
respondent (12%) > 50(2)respondents, the total is(17) respondents(100%) from that we
understand that almost all age groups were participated in the study.
Table 4.2 Item no.1 shows that the postilion of respondents. Based on the above table,
from the total respondent (17), 4(23.52%) respondents were operator / line managers,
4(23.52%) were supervisors, 2(11.76%) were managers and 7(41.2%) respondents were
senior employees. Also based on the table 4.2 Item no.2 shows that the work experiences
of the respondents were analyzed as follow. <5 years, 2 (11.76%), from 5-10 years 3
(17.64%) respondents, from 10-15 years 5(29.41%) respondents, from 16-20 years
4(23.53%) and >20years 3(17.64%) based on the table employees were experienced.
22
Table 4.3: Educational background of respondents
Item Responses Number of Percentage (%)
respondents
Educational level Certificate - -
Diploma 12 71%
Degree 5 29%
Master’s degree -
PhD -
Total 17 100
Source: analysis of this study questionnaire, 2015
Table 4.3 portrays that from the total respondent 12(71%) diploma level employees and
5(29%) degree level employees. Based on the table 4.3 more of the employees were
diploma level (71%) and only (29%) were complete their degree level.
Total 17 100%
2. Is your Yes 5 29.4%
strategic plan No 6 35.3%
is derived I don’t know 6 35.3%
from
assessment of
internal
organizational
weakness?
Total 17 100
Source: analysis of this study questionnaire, 2015
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Table 4.4 Item no.1 reflect that the company’s long range strategy and that shows the
company have 5 years strategic plan. All 17(100%) respondents agree that the company
have 5 years strategy. Item no.2 shows the company’s strategic plan is derived from the
assessment of inter-organizational weakness 5(29.4%) respondents response was yes,
6(35.3%) said no and 6(35.3%) respondents were not know. Based on the above table
even if the company have 5 years strategic plan, there were the only 5(25.4%)
respondents know from where it is driven, 6(35.3) respondents were refuse it and 6(35.3)
respondents were not know totally from where it is driven.
Table 4.5 shows that 9(52.94) respondents agree that the company’s strategy is shared
with functional level, 4(23.53%) doesn’t agrees that and 4(23.53%) of respondents
doesn’t know about it. From the table we understand that the company’s strategic plan is
shared with its functional unit.
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Table 4.6 portray that the awareness about supply chain decisions based on the table
6(35.29%) employees have awareness about the supply chain decisions, 4(23.52%)
employees have no awareness about supply chain decisions and 7(41.2%) respondents
doesn’t know about supply chain decision. From this we understand still majority of the
employees doesn’t have awareness about supply chain decision.
Table 4.7 Item no.1 shows that 4(23.52%) respondents agrees that the strategic supply
chain decisions is consistent with a higher order mission statement of the company,
6(35.29%) disagrees that consistency and 7(41.2%) respondents doesn’t have information
about the consistency of supply chain decision. Based on the above information we
understand, the company’s supply chain decisions doesn’t consistent with its mission
statements or the respondents doesn’t have awareness about it. Item no.2 shows that
8(47.06%) respondents agree that the strategic plan considers the activities of the supply
chain network as whole, 4(23.53%) doesn’t agree that and 5(29.41) respondents were
doesn’t know about it. Form this we understand that almost half of the respondents
8(47.06%) agreed, but there are also half of the respondents 9(54.94%) are still not know
it.
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Table 4.8: Company’s tactical plan
Item Response No. of Percentage (%)
respondent
1. You tactical plan covers
1 year 4 23.53%
1-2years 4 23.53%
2-3 years 9 52.94%
I don’t know -
Total 17 100
2. How your tactical plan Monthly 2 11.76%
is updated? Quarterly 6 35.3%
Yearly 9 52.94%
Total 17 100
Source: analysis of this study questionnaire, 2015
The above table 4.8, Item no.1 portray that 4(23.53%) agrees that the company’s tactical
plan covers 1 year, 4(23.53%) agree that the company’s tactical plan covers 1-2 years and
the majority of respondents (9) (52.94%) agrees that the company’s tactical plan covers
2-3 years. Based on that we can interpret that the majorities responses. Additionally Item
no.2 shows that 2(11.76%) respondents agree that the company’s tactical plan is updated
monthly, 6(35.3%) respondents agrees that quarterly update and 9(52.94%) respondents
agrees that company’s tactical plan updated yearly therefore we conclude that the plan is
updated yearly.
26
Table 4.9, Item no.1 shows that 8(47.06%) of the respondents agreed that the quality
management is included under the company’s tactical plan, 4(23.53%) disagree that the
company’s tactical plan includes quality management and 5(29.41%) were don’t know
about that. Item no.2; 7(41.2%) respondents agrees that the activities like integration of
information technology is included under company’s tactical plan 3 (17.65%)
respondents disagree that and 7(41.2%) respondents don’t know it.
Table 4.10 shows that 6(35.29%) of respondents agree that the company’s inventory
policy is designed based on company’s tactical plan, 6(35.29%) of the respondents were
not agree on it and 6(35.29%) of the total respondents were not know about it.
Total 17 100
Source: analysis of this study questionnaire, 2015
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Table 4.11, Item no.1 show that 8(47.06%) respondents agree that the company have an
operational plan 6(35.29%) disagree and 3(17.65%) do not know about company’s
operational plan. Based on the table still the majority of the employees do not know
clearly the company’s operational plan. Item no.2 shows that 5(29.41%) have an
awareness about the company’s operational plan 6(35.5%) respondent do not have are
awareness and 6(35.3%) do not know the company’s operational plan. Based on the
above analysis the majority of the company’s employees do not have awareness about
supply chain operations.
Table 4.12, Item 1 portray that 7(41.18%) respondents agree that the operational decision
considers the daily activities of the company, 3(17.64%) disagree that and 7(41.18)
respondents do not know that.
Table 4.13, shows that the 6(35.29%) respondents agree on the motivation of employees
to accomplish day – to- day tasks, 6(35.29% disagree and 5(29.42%) do not know about
it. We conclude that the employees are not motivated to accomplish their tasks.
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CHAPTER FIVE
29
Generally, the company has 5 years supply chain strategic plan and its strategic plan is
not derived from its weakness, the company’s trend on supply chain operations(planning)
is based on 2-3 year ranges and the company employees were not motivated in order to
fulfill their tasks appropriately.
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5.2 Conclusions
Based on the summary of major findings, the researcher draws the following conclusions:
o The company supply chain strategic plan is not derived from the assessment of its
internal organizational weakness.
o Almost the company’s supply chain strategy is shared with its functional units.
o The majority of respondents were not having awareness about supply chain
decision.
o The company’s strategic supply chain decision was not consistent with it’s a
higher order mission statement.
o The company’s strategic supply chain plan does not consider the activities of the
supply chain network as whole.
o The company’s supply chain tactical plan is updated at yearly manner.
o In the company’s supply chain tactical plan, the logistics decisions were not
considered.
o The inventory policy of the company’s is not designed based on the tactical plan.
o The employees’ awareness about the company’s operation is less.
o The company’s employees are not motivated to accomplish day –to day tasks with
in a specific time.
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5.3 Recommendation
Based on the analysis, major findings and conclusion, the researcher would like to
recommend that the organization could focus on the following issues to solve the
problem related with its supply chain decisions.
32
References
Baver, C. C. (2006). supply chain management and e-commerce. India: Inc.
Charles C. poirier and Michael Baver. (2006). Supply chain management and e-
commerce. India: press.
Chopra, s. (2007). supply chain management (3rd ed.). new jersey: pearson education,
Inc.
David N. Burt and Donald W. Dobler. (2003). world class supply chain management.
USA: chicago.
Kenneth Lysonsad Brain Farrington. (2006). Purchasing and supply chain management
(7th ed.). USA.
Stevenson, W. J. (2005).
www.onlineSC.com
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AKSUM UNIVERSITY
Dear respondents
Part one
Personal information
Please put tick mark ( ) in the box provided for each questions
1. Sex
Male Female
34
2. Age
Above
4. Educational background
5. Your specification
6. Work position
Part two
Yes No
Yes No
Yes No
Yes No
35
5. Does your strategic plan of supply chain is consistent with a higher order
Yes No
6. Is your strategic plan considers the activities of the supply chain network as whole?
Yes No
Yes No
10. Is your company tactical decision considers logistics like integration of information
Technology?
Yes No
11. Is the inventory policies of your company are designed based on tactical plan?
Yes No
Yes No
13. If your response is yes for the number 12, are the employee of the company having
Yes No
14. Does your operational decision consider the daily activities of the company?
Yes No
15. Are the company’s employees are motivated to accomplish day to day
36
Yes No
37