IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v103y2013icp189-196.html
   My bibliography  Save this article

Stochastic production planning for a biofuel supply chain under demand and price uncertainties

Author

Listed:
  • Awudu, Iddrisu
  • Zhang, Jun

Abstract

In this paper, we propose a stochastic production planning model for a biofuel supply chain under demand and price uncertainties. The supply chain consists of biomass suppliers, biofuel refinery plants and distribution centers. A stochastic linear programming model is proposed within a single-period planning framework to maximize the expected profit. Decisions such as the amount of raw materials purchased, the amount of raw materials consumed and the amount of products produced are considered. Demands of end products are uncertain with known probability distributions. The prices of end products follow Geometric Brownian Motion (GBM). Benders decomposition (BD) with Monte Carlo simulation technique is applied to solve the proposed model. To demonstrate the effectiveness of the proposed stochastic model and the decomposition algorithm, a representative supply chain for an ethanol plant in North Dakota is considered. To investigate the results of the proposed model, a simulation framework is developed to compare the performances of deterministic model and proposed stochastic model. The results from the simulation indicate the proposed model obtain higher expected profit than the deterministic model under different uncertainty settings. Sensitivity analyses are performed to gain management insight on how profit changes due to the uncertainties affect the model developed.

Suggested Citation

  • Awudu, Iddrisu & Zhang, Jun, 2013. "Stochastic production planning for a biofuel supply chain under demand and price uncertainties," Applied Energy, Elsevier, vol. 103(C), pages 189-196.
    • Handle: RePEc:eee:appene:v:103:y:2013:i:c:p:189-196
    DOI: 10.1016/j.apenergy.2012.09.025
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261912006666
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2012.09.025?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Awudu, Iddrisu & Zhang, Jun, 2012. "Uncertainties and sustainability concepts in biofuel supply chain management: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(2), pages 1359-1368.
    2. Niknam, Taher & Khodaei, Amin & Fallahi, Farhad, 2009. "A new decomposition approach for the thermal unit commitment problem," Applied Energy, Elsevier, vol. 86(9), pages 1667-1674, September.
    3. Tembo, Gelson & Epplin, Francis M. & Huhnke, Raymond L., 2003. "Integrative Investment Appraisal of a Lignocellulosic Biomass-to-Ethanol Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(3), pages 1-23, December.
    4. Schmidt, Johannes & Leduc, Sylvain & Dotzauer, Erik & Kindermann, Georg & Schmid, Erwin, 2010. "Cost-effective CO2 emission reduction through heat, power and biofuel production from woody biomass: A spatially explicit comparison of conversion technologies," Applied Energy, Elsevier, vol. 87(7), pages 2128-2141, July.
    5. Elghali, Lucia & Clift, Roland & Sinclair, Philip & Panoutsou, Calliope & Bauen, Ausilio, 2007. "Developing a sustainability framework for the assessment of bioenergy systems," Energy Policy, Elsevier, vol. 35(12), pages 6075-6083, December.
    6. Sajadieh, Mohsen S. & Akbari Jokar, Mohammad R., 2009. "Optimizing shipment, ordering and pricing policies in a two-stage supply chain with price-sensitive demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(4), pages 564-571, July.
    7. Glenn Pederson & Tianyu Zou, 2009. "Using real options to evaluate ethanol plant expansion decisions," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 69(1), pages 23-35, May.
    8. Salameh, Mamdouh G., 2003. "Can renewable and unconventional energy sources bridge the global energy gap in the 21st century?," Applied Energy, Elsevier, vol. 75(1-2), pages 33-42, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ba, Birome Holo & Prins, Christian & Prodhon, Caroline, 2016. "Models for optimization and performance evaluation of biomass supply chains: An Operations Research perspective," Renewable Energy, Elsevier, vol. 87(P2), pages 977-989.
    2. Cambero, Claudia & Sowlati, Taraneh, 2014. "Assessment and optimization of forest biomass supply chains from economic, social and environmental perspectives – A review of literature," Renewable and Sustainable Energy Reviews, Elsevier, vol. 36(C), pages 62-73.
    3. Azadeh, Ali & Vafa Arani, Hamed, 2016. "Biodiesel supply chain optimization via a hybrid system dynamics-mathematical programming approach," Renewable Energy, Elsevier, vol. 93(C), pages 383-403.
    4. Ghadge, Abhijeet & van der Werf, Sjoerd & Er Kara, Merve & Goswami, Mohit & Kumar, Pankaj & Bourlakis, Michael, 2020. "Modelling the impact of climate change risk on bioethanol supply chains," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    5. Baudry, Gino & Macharis, Cathy & Vallée, Thomas, 2018. "Range-based Multi-Actor Multi-Criteria Analysis: A combined method of Multi-Actor Multi-Criteria Analysis and Monte Carlo simulation to support participatory decision making under uncertainty," European Journal of Operational Research, Elsevier, vol. 264(1), pages 257-269.
    6. De Meyer, Annelies & Cattrysse, Dirk & Rasinmäki, Jussi & Van Orshoven, Jos, 2014. "Methods to optimise the design and management of biomass-for-bioenergy supply chains: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 657-670.
    7. He-Lambert, Lixia & English, Burton C. & Lambert, Dayton M. & Shylo, Oleg & Larson, James A. & Yu, T. Edward & Wilson, Bradly, 2018. "Determining a geographic high resolution supply chain network for a large scale biofuel industry," Applied Energy, Elsevier, vol. 218(C), pages 266-281.
    8. Shabani, Nazanin & Akhtari, Shaghaygh & Sowlati, Taraneh, 2013. "Value chain optimization of forest biomass for bioenergy production: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 23(C), pages 299-311.
    9. Sharma, B. & Ingalls, R.G. & Jones, C.L. & Khanchi, A., 2013. "Biomass supply chain design and analysis: Basis, overview, modeling, challenges, and future," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 608-627.
    10. Mafakheri, Fereshteh & Nasiri, Fuzhan, 2014. "Modeling of biomass-to-energy supply chain operations: Applications, challenges and research directions," Energy Policy, Elsevier, vol. 67(C), pages 116-126.
    11. Efthymios Rodias & Remigio Berruto & Dionysis Bochtis & Alessandro Sopegno & Patrizia Busato, 2019. "Green, Yellow, and Woody Biomass Supply-Chain Management: A Review," Energies, MDPI, vol. 12(15), pages 1-22, August.
    12. Liu, Liwei & Ye, Junhong & Zhao, Yufei & Zhao, Erdong, 2015. "The plight of the biomass power generation industry in China – A supply chain risk perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 680-692.
    13. Haji Esmaeili, Seyed Ali & Szmerekovsky, Joseph & Sobhani, Ahmad & Dybing, Alan & Peterson, Tim O., 2020. "Sustainable biomass supply chain network design with biomass switching incentives for first-generation bioethanol producers," Energy Policy, Elsevier, vol. 138(C).
    14. Bergthorson, Jeffrey M. & Thomson, Murray J., 2015. "A review of the combustion and emissions properties of advanced transportation biofuels and their impact on existing and future engines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 1393-1417.
    15. Fumasi, Roland J. & Richardson, James W. & Outlaw, Joe L., 2008. "The Economics Of Growing And Delivering Cellulosic Feedstocks In The Beaumont, Texas Area," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6788, Southern Agricultural Economics Association.
    16. Chen, Yen-Haw & Lu, Su-Ying & Chang, Yung-Ruei & Lee, Ta-Tung & Hu, Ming-Che, 2013. "Economic analysis and optimal energy management models for microgrid systems: A case study in Taiwan," Applied Energy, Elsevier, vol. 103(C), pages 145-154.
    17. Delivand, Mitra Kami & Barz, Mirko & Gheewala, Shabbir H. & Sajjakulnukit, Boonrod, 2011. "Economic feasibility assessment of rice straw utilization for electricity generating through combustion in Thailand," Applied Energy, Elsevier, vol. 88(11), pages 3651-3658.
    18. Gupta, Vishal Kumar & Ting, Q.U. & Tiwari, Manoj Kumar, 2019. "Multi-period price optimization problem for omnichannel retailers accounting for customer heterogeneity," International Journal of Production Economics, Elsevier, vol. 212(C), pages 155-167.
    19. Nair, Sujith & Paulose, Hanna, 2014. "Emergence of green business models: The case of algae biofuel for aviation," Energy Policy, Elsevier, vol. 65(C), pages 175-184.
    20. Fumasi, Roland J. & Klose, Steven L. & Kaase, Greg H. & Richardson, James W. & Outlaw, Joe L., 2008. "Viability of cellulosic feedstock production from producer to biorefinery," Integration of Agricultural and Energy Systems Conference, February 12-13, 2008, Atlanta, Georgia 48716, Farm Foundation.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:103:y:2013:i:c:p:189-196. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.