An Optimization Model for Biofuel Supply Chain

Biofuels have attracted much attention as a sutuible substitute for fossil fuels in last decade. Designing an efficient supply chain is an essential requirement for commercialization of biofuel production. This paper presents a mixed integer linear programming (MILP) model to design biofuel supply chains in which the biofuel demand is under ARMA time series models. It is studied how ARMA time series structure of biofuel demand affect the supply chain design. A numerical example is used to demonstrates application of the proposed model to design the most optimal biofuel supply chain. In addition, to provide insights for efficiently designing a biofuel supply chain, the ARMA models of biofuel demand is used to forecast the biofuel supply chain design for a 8-year.