Design Of A Biofuel Supply Network Under Stochastic And Price-Dependent Biomass Availability

This article presents a framework for profit-maximizing strategic bio-energy supply chain design by taking into account variability in biomass as a response to price set as well as uncertainty in biomass yield. We present our model as a two-stage stochastic integer program for a multi-period integrated design of a network in which the here-and-now strategic decisions include biorefinery locations and size as well as base biomass price. To efficiently solve our model, we suggest an L-shaped-based algorithm along with a Sample Average Approximation approach. Finally, we demonstrate our results in a case study in Texas using realistic data. Within our framework, we present the relationship between biomass and biofuel price, as well as the optimal network design for the biofuel producer.