Integrating biomass quality variability in stochastic supply chain modeling and optimization for large-scale biofuel production

The production of biofuels using second-generation feedstocks has been recognized as an important alternative source of sustainable energy and its demand is expected to increase due to regulations such as the Renewable Fuel Standard. However, the pathway to biofuel industry maturity faces unique, un-addressed challenges. To address this challenges, this paper presents an optimization model which quantifies and controls the impact of biomass quality variability on supply chain related decisions and technology selection. We propose a two-stage stochastic programming model and associated efficient solution procedures for solving large-scale problems to (1) better represent the random nature of the biomass quality (defined by moisture and ash contents) in supply chain modeling, and (2) assess the impact of these uncertainties on the supply chain design and planning. The proposed model is then applied to a case study in the state of Tennessee. Results show that high moisture and ash contents negatively impact the unit delivery cost since poor biomass quality requires the addition of quality control activities. Experimental results indicate that supply chain cost could increase as much as 27%-31% when biomass quality is poor. We assess the impact of the biomass quality on the topological supply chain. Our case study indicates that biomass quality impacts supply chain costs; thus, it is important to consider the impact of biomass quality in supply chain design and management decisions. (C) 2017 Elsevier Ltd. All rights reserved.