Abstract
Renewable energy, especially biofuels, is seen as a viable solution to replace fossil fuels. Tighter environmental regulations have encouraged countries to develop strategic approaches to utilize alternative resources and new technologies. In retrospect, the performances of supply chains (SCs) are important from economic and environmental perspectives. Current research mainly focuses on the optimization of biofuel SCs in terms of economics, and distribution networks for other products and markets. There has been less work addressing the design of the distribution network for biofuel SC, in centralised/decentralised distribution, covering financial and environmental aspects. In this paper, we propose the optimization framework for biofuel SC with respect to the type of distribution network, and geographical locations of the facilities. Our research focuses on finding the optimal locations of the biofuel plant, considering biomass dispersions and customer locations based on candidate points. We also investigate the effects of using different transportation modes and the environmental effects on the type of distribution network used. A case study of a lignocellulosic plant distributing ethanol to its customers in various cities within UK has been used to validate the above framework. The result shows that the total distances of travel, as well as the unit transportation cost dominate the strategic application of either a centralised or decentralised distribution network. The concept presented in this research can be applied to other distribution design cases in various geographical locations and countries. © 2013 Elsevier B.V.