Simultaneous Design and Operation Decisions for Biorefinery Supply Chain Networks: Centralized vs. Distributed System

We propose an optimization model that enables the selection of biofuel conversion technologies, processing capacities and locations, and the logistics of transportation from the locations of forestry resources to the conversion sites and then to the final markets. A mixed integer linear program (MILP) model is built to solve for (1) the optimal number, locations, and sizes of various types of processing plants, and (2) the amounts of biomass, intermediate products, and final products to be transported between the selected locations, with the goal of maximizing the overall profit under present constraints. It also outputs the cost and profit data associated the selected network in a convenient form for further analysis. The model is tested in the context of designing both distributed and centralized processing system networks based on an industry-representative data set covering the South-eastern region of the United States. We investigate: 1) Which parameters have major effect on the overall economics, and 2) benefits of going to more distributed types of processing networks, in terms of the overall economics and the robustness to demand variations.