Optimal Supply Chains for Biofuel Production

Both environmental and economic performances are critical in the development of the biofuel industry for it to truly be a sustainable alternative to petroleum-based transportation fuels. In this chapter, that challenge is examined for a 9-state region in the Midwestern United States by formulating and solving a supply chain optimization problem with the competing objectives of maximizing profit (as Net Present Value) and minimizing greenhouse gas emissions. Recent life cycle analysis literature on biofuels is leveraged to quantify the impact of each activity in the biofuel supply chain. The resulting multiobjective mixed integer linear program is solved using an ε-constraint approach that yields the Pareto Frontier of efficient supply chain designs. This allows for the identification of supply chain decisions that greatly reduce greenhouse gas emissions for minimal economic losses.