IDEAS home Printed from https://ideas.repec.org/p/ags/aaea09/49407.html
   My bibliography  Save this paper

Choice of optimum feedstock portfolio for a cellulosic ethanol plant – A dynamic linear programming solution

Author

Listed:
  • Kumarappan, Subbu
  • Ivanic, Rasto

Abstract

When the lignocellulosic biofuels industry reaches maturity and many types of biomass sources become economically viable, management of multiple feedstock supplies – that vary in their yields, density (tons per unit area), harvest window, storage and seasonal costs, storage losses, transport distance to the production plant – will become increasingly important for the success of individual enterprises. The manager’s feedstock procurement problem is modeled as a multi-period sequence problem to account for dynamic management over time. The case is illustrated with a hypothetical 53 million annual US gallon cellulosic ethanol plant located in south west Kansas that requires approximately 700,000 metric dry tons of biomass. The problem is framed over 40 quarters (10 years), where the production manager minimizes cumulative costs by choosing the land acreage that has to be contracted with for corn stover collection, or dedicated energy production and the amount of biomass stored for off-season. The sensitivity of feedstock costs to changes in yield patterns, harvesting and transport costs, seasonal costs and the extent of area available for feedstock procurement are studied. The outputs of the model include expected feedstock cost and optimal mix of feedstocks used by the cellulosic ethanol plant every year. The problem is coded and solved using GAMS software. The analysis demonstrates how the feedstock choice affects the resulting raw material cost for cellulosic ethanol production, and how the optimal combination varies with two types of feedstocks (annual and perennial).

Suggested Citation

  • Kumarappan, Subbu & Ivanic, Rasto, 2009. "Choice of optimum feedstock portfolio for a cellulosic ethanol plant – A dynamic linear programming solution," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49407, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea09:49407
    DOI: 10.22004/ag.econ.49407
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/49407/files/AAEA_2009_AM_Paper_ID_613246.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.49407?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
    ---><---

    References listed on IDEAS

    as
    1. Sarah C. Brechbill & Wallace E. Tyner, 2008. "The Economics Of Biomass Collection,Transportation, And Supply To Indiana Cellulosic And Electric Utility Facilities," Working Papers 08-03, Purdue University, College of Agriculture, Department of Agricultural Economics.
    2. French, Ben C., 1977. "The Analysis of Productive Efficiency in Agricultural Marketing: Models, Methods, and Progress," A Survey of Agricultural Economics Literature, Volume 1: Traditional Fields of Agricultural Economics 1940s to 1970s,, Agricultural and Applied Economics Association.
    3. Ben C. French, 1960. "Some Considerations in Estimating Assembly Cost Functions for Agricultural Processing Operations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 42(4), pages 767-778.
    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. Miranowski, John & Rosburg, Alicia, 2010. "An Economic Breakeven Model of Cellulosic Feedstock Production and Ethanol Conversion with Implied Carbon Pricing," Staff General Research Papers Archive 13166, Iowa State University, Department of Economics.
    2. Rosburg, Alicia & Miranowski, John & Jacobs, Keri, 2013. "Cellulosic biofuel potential under land constraints: locations, plant sizes and feedstock supply costs," ISU General Staff Papers 201308130700001049, Iowa State University, Department of Economics.
    3. Kilmer, Richard L. & Armbruster, Walter J., 1984. "Methods For Evaluating Economic Efficiency In Agricultural Marketing," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(1), pages 1-9, July.
    4. Maung, Thein A. & McCarl, Bruce A., 2013. "Economic factors influencing potential use of cellulosic crop residues for electricity generation," Energy, Elsevier, vol. 56(C), pages 81-91.
    5. Martin, Larry & Richards, Robert R. & Usborne, W.R., 1979. "An Economic Comparison of Alternative Selling Methods for Slaughter Cattle in Ontario," Working Papers 245001, University of Guelph, Department of Food, Agricultural and Resource Economics.
    6. Spielman, Kimberly & Whipple, Glen & McLemore, Dan, 1982. "Estimation Of A Long Run Average Cost Curve Using A Frontier Function: An Application To The Tennessee Livestock Auction Market Industry," 1982 Annual Meeting, August 1-4, Logan, Utah 279185, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Lesser, William H. & Greene, W. H., 1980. "Economies Of Size And Operating Efficiency Of Livestock Markets: A Frontier Function Approach," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 9(1), pages 1-4, April.
    8. 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.
    9. Kung, Chih-Chun & McCarl, Bruce A. & Cao, Xiaoyong, 2013. "Economics of pyrolysis-based energy production and biochar utilization: A case study in Taiwan," Energy Policy, Elsevier, vol. 60(C), pages 317-323.
    10. Emerson M. Babb, 1986. "Production and operations management," Agribusiness, John Wiley & Sons, Ltd., vol. 2(4), pages 421-429.
    11. Charles E. French & Randall E. Westgren, 1986. "Working with other disciplines: The role of agricultural economists in interdisciplinary agribusiness research," Agribusiness, John Wiley & Sons, Ltd., vol. 2(4), pages 491-500.
    12. 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.
    13. Tyner, Wallace E. & Rismiller, Craig W., 2010. "Transportation Infrastructure Implications of Development of a Cellulosic Biofuels Industry for Indiana," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 49(1).
    14. Riley, Harold & Allen, Kris & Jackson, Mark, 1984. "An Assessment of the Economic Feasibility of New Investments in Beef Slaughtering and Processing Facilities in Michigan," Agricultural Economic Report Series 201334, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    15. Catherine A. Durham, 1991. "The Empirical Analysis of Oligopsony in Agricultural Markets: Residual Supply Estimation in California's Processing Tomato Market," Food Marketing Policy Center Research Reports 015, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    16. Stephen R. Koontz & John D. Lawrence, 2010. "Impacts of alternative marketing agreement cattle procurement on packer costs, gross margins, and profits: evidence from plant-level profit and loss data," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 1-24.
    17. Hailu, Getu & Goddard, Ellen W. & Jeffrey, Scott R., 2005. "Measuring Efficiency in Fruit and Vegetable Marketing Co-operatives with Heterogeneous Technologies in Canada," 2005 Annual meeting, July 24-27, Providence, RI 19507, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Rahdar, Mohammad & Wang, Lizhi & Hu, Guiping, 2014. "Potential competition for biomass between biopower and biofuel under RPS and RFS2," Applied Energy, Elsevier, vol. 119(C), pages 10-20.
    19. Magid A. Dagher & Lynn W. Robbins, 1987. "Grain export elevators: An economies of size analysis," Agribusiness, John Wiley & Sons, Ltd., vol. 3(2), pages 169-178.
    20. Antle, John M., 1999. "Benefits and costs of food safety regulation," Food Policy, Elsevier, vol. 24(6), pages 605-623, December.

    More about this item

    Keywords

    Agribusiness;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ags:aaea09:49407. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    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.