Resource allocation and route planning under the collection price uncertainty for the biomass supply chain

Abstract

The escalating severity of global warming has drawn worldwide attention to ecological problems. Nevertheless, with the introduction of environmental policies, biomass resources have been effectively developed as a renewable energy source. This paper investigates an advanced biomass supply chain design wherein biomass resources are initially converted into bio-oil through widely distributed fast pyrolysis facilities, and are subsequently transported to a centralised biorefinery for further refining into biofuels. This novel biomass supply chain addressed three key issues: (1) The number of fast pyrolysis facilities, (2) The allocation of resources, and (3) The routes of resources transport. In respect of these problems, a two-stage stochastic mixed integer programming model is established to minimise the total cost of the biomass supply chain considering the uncertainty collection price of fast pyrolysis facilities. A hybrid simulated annealing algorithm which incorporates the sample average approximation method is proposed to solve the stochastic model and is effectiveness for large-scale examples. Finally, a sensitivity analysis is performed using the proposed algorithm and the results show that the proposed stochastic model outperforms the deterministic model under uncertain collection price. The model allows optimising the biomass supply chain economic performances and minimise financial risk on investment by determining the fast pyrolysis facility locations, reasonable resource allocation and optimal transport routes under uncertain collection price.