Modeling and optimization of biomass quality variability for decision support systems in biomass supply chains

A feasible alternative to the production of fossil fuels is the production of biofuels. In order to minimize the costs of producing biofuels, we developed a stochastic programming formulation that optimizes the inbound delivery of biomass. The proposed model captures the variability in the moisture and ash content in the biomass, which define its quality and affect the cost of biofuel. We propose a novel hub-and-spoke network to take advantage of the economies of scale in transportation and to minimize the effect of poor quality. The first-stage variables are the potential locations of depots and biorefineries, and the necessary unit trains to transport the biomass. The second-stage variables are the flow of biomass between the network nodes and the third-party bioethanol supply. Acase study from Texas is presented. The numerical results show that the biomass quality changes the selected depot/biorefinery locations and conversion technology in the optimal network design. The cost due to poor biomass quality accounts for approximately 8.31% of the investment and operational cost. Our proposed L-shaped with connectivity constraints approach outperforms the benchmark L-shaped method in terms of solution quality and computational effort by 0.6% and 91.63% on average, respectively.