Optimal design and operation of a second-generation biofuels supply chain

Abstract

This article investigates how climate influences the value of adding preprocessing depots to a second-generation biorefinery’s supply chain. This is vital because humidity determines the amount of dry matter loss—exponential decay of energy content—suffered by biomass stored without preprocessing. The large volume of biomass required to fuel a biorefinery poses challenges in storage and in transportation. Further complications arise because the biomass is produced seasonally by hundreds of growers. Thus, recent failures of biorefineries may have been avoided, and future success may be achieved, by adding an intermediate layer to a biorefinery’s supply chain. A rigorous climate-based analysis of cost functions for each potential grower/depot pair leads to a stochastic program that optimizes the locations of depots, the assignment of growers to depots, and the volume of biomass stored fieldside vs. the volume stored as pelleted feedstock at depots. A computational study reveals that the humidity of the climate has much greater influence on the value of adding pre-processing depots to a second-generation biofuel supply chain than does transportation consolidation or any other parameter, endogenous or exogenous. Under favorable circumstances, our process reduces a biorefinery’s costs by over 30%, on average.

KEYWORDS:

• Second-generation biofuels
• Renewable Fuel Standard
• logistics
• depots

Notes

1 We acknowledge that a grower’s volume of agricultural production is not constant throughout harvest. Calculations with W_j values that vary generate similar results, at the expense of a loss in clarity.

Additional information

Notes on contributors

H. Neil Geismar

H. Neil Geismar is a Professor in the Mays Business School at Texas A&M University. He holds a Center for Executive Development Professorship. He earned a PhD degree from the University of Texas at Dallas in operations management. His research addresses production scheduling, especially in the field of robotic cell scheduling; supply chain management, focusing on the coordination of the manufacturing and delivery functions in low- or no-inventory environments via scheduling; currency supply chains in different countries; and remanufacturing. He has served as a consultant to industrial clients to improve their productivity and profitability. His papers have appeared in many journals, including Production and Operations Management, INFORMS Journal on Computing, Manufacturing and Services Operations Management, SIAM Review, and IISE Transactions. He is a member of INFORMS and of POMS.

Bruce A. McCarl

Bruce A. McCarl is University Distinguished Professor, Presidential Impact Fellow, Regents Professor, Senior AgriLife Research Fellow, and Professor of Agricultural Economics at Texas A&M. Dr. McCarl has been at Texas A&M since 1985 and was previously at Oregon State and Purdue. He a PhD in management science from Pennsylvania State University. He works on economic implications of the food-energy-water nexus, global climate change and greenhouse gas emission reduction, forestry and agricultural policy design, biofuels, mathematical programming, and risk analysis. He is the author of nearly 300 journal articles and more than 500 other papers and presentations. He has been involved with over $82 million in sponsored research. He is a Fellow of the Agricultural and Applied Economics Association plus a fellow of both the Western and Southern Agricultural Economics Associations. He was part of the Intergovernmental Panel on Climate Change that was co-recipient of the 2007 Nobel Peace Prize.

Stephen W. Searcy

Stephen W. Searcy is Professor Emeritus of the Biological and Agricultural Engineering Department, Texas A&M University. Dr. Searcy's research has focused on advanced agricultural machines systems, including biomass logistics and precision agriculture. He is a Past-President of the American Society of Agricultural and Biological Engineers.