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Supply, operational, and market risk reduction opportunities: Managing risk at a cellulosic biorefinery

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  • Mamun, Saleh
  • Hansen, Jason K.
  • Roni, Mohammad S.

Abstract

This paper evaluates supply, operational- and market-risk reduction opportunities for the case where management at a cellulosic biorefinery adopts a supply chain design based on a distributed depot concept. In contrast to the conventional feedstock-supply system, a supply chain based on a network of depots providing feedstock to a biorefinery employs geographically distributed depots where feedstock undergoes preprocessing into densified pellets, thus allowing feedstock to be transported a greater distance. This study used simulation methods to show that distributed depots may work as a risk absorber for a cellulosic biorefinery. Compared to a base case, a distributed depot supply system reduced the operational and market risk by 17.5% and 5%, respectively. Moreover, when contract management and alternatives markets were considered, a reduction of supply, operational, and market risk, by approximately 48%, 69%, and 35%, respectively, were observed. The expected return on investment (ROI) increased from −4% to 33%. However, this positive ROI largely depends on assuming commoditization and the creation of intermediate markets for alternative, merchandisable products.

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  • Mamun, Saleh & Hansen, Jason K. & Roni, Mohammad S., 2020. "Supply, operational, and market risk reduction opportunities: Managing risk at a cellulosic biorefinery," Renewable and Sustainable Energy Reviews, Elsevier, vol. 121(C).
    • Handle: RePEc:eee:rensus:v:121:y:2020:i:c:s1364032119308822
    DOI: 10.1016/j.rser.2019.109677
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    Cited by:

    1. Sajid, Zaman, 2021. "A dynamic risk assessment model to assess the impact of the coronavirus (COVID-19) on the sustainability of the biomass supply chain: A case study of a U.S. biofuel industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).
    2. Khoshnevisan, Benyamin & Duan, Na & Tsapekos, Panagiotis & Awasthi, Mukesh Kumar & Liu, Zhidan & Mohammadi, Ali & Angelidaki, Irini & Tsang, Daniel CW. & Zhang, Zengqiang & Pan, Junting & Ma, Lin & Ag, 2021. "A critical review on livestock manure biorefinery technologies: Sustainability, challenges, and future perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    3. Kucuksayacigil, Fikri & Roni, Mohammad & Eksioglu, Sandra D. & Bhuiyan, Tanveer H. & Chen, Qiushi, 2022. "Optimal control to handle variations in moisture content and reactor in-feed rate," Energy, Elsevier, vol. 248(C).

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