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Design of a biofuel supply network under stochastic and price-dependent biomass availability

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  • Gökhan Memişoğlu
  • Halit Üster

Abstract

This article presents a framework for profit-maximizing strategic bio-energy supply chain design by taking into account variability in biomass as a response to price set as well as uncertainty in biomass yield. We present our model as a two-stage stochastic integer program for a multi-period integrated design of a network in which the here-and-now strategic decisions include biorefinery locations and size as well as base biomass price. To efficiently solve our model, we suggest an L-shaped-based algorithm along with a Sample Average Approximation approach. Finally, we demonstrate our results in a case study in Texas using realistic data. Within our framework, we present the relationship between biomass and biofuel price, as well as the optimal network design for the biofuel producer.

Suggested Citation

  • Gökhan Memişoğlu & Halit Üster, 2021. "Design of a biofuel supply network under stochastic and price-dependent biomass availability," IISE Transactions, Taylor & Francis Journals, vol. 53(8), pages 869-882, August.
    • Handle: RePEc:taf:uiiexx:v:53:y:2021:i:8:p:869-882
    DOI: 10.1080/24725854.2020.1869870
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