Facility Location and Supply Chain Optimization for a Biorefinery

This paper presents a systematic approach for the optimal production planning and facility placement of a biorefinery. A structural representation is first developed to include sources of biomass feedstock, distributed preprocessing hubs, and centralized processing facilities to produce desired products and byproducts. An optimization formulation is developed to determine the optimal supply chain, size, operational strategies, and location of the biorefinery and preprocessing hub facilities. The model considers simultaneously the optimal selection of different configurations considering the specific location configuration (centralized and/or distributed), selection of biomass, and processing facilities to determine the one with the maximum overall net profit. The objective function considers the overall sales and the costs for the feedstocks, transportation costs, capital costs for the facilities, and the operational costs for the facilities. The model also considers nonlinear economy-of-scale behavior of the capital-cost functions that are reformulated using disjunctive models to yield convex relationships to guarantee a global optimal solution. The proposed model was applied to two case studies.