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Journal of Cleaner Production 137 (2016) 1179e1190

Contents lists available at ScienceDirect

Journal of Cleaner Production


journal homepage: www.elsevier.com/locate/jclepro

Investment planning and strategic management of sustainable


systems for clean power generation: An -constraint based multi
objective modelling approach
Sebnem Ylmaz Balaman
Department of Industrial Engineering, Dokuz Eylul University, Tinaztepe Yerleskesi, Buca, 35160 Izmir, Turkey

a r t i c l e i n f o

a b s t r a c t

Article history:
Received 3 April 2016
Received in revised form
26 July 2016
Accepted 27 July 2016
Available online 2 August 2016

Biomass based energy production has been considered as a part of the solution to energy crisis, which is
mainly caused by diminishing fossil fuel resources and environmental pollution from traditional fossil
fuel based energy production systems. Therefore, it is important to design sustainable and effective
systems for biomass based energy production to provide competitive advantage on fossil fuel resourced
systems. This study develops a novel optimization model to aid investment planning and strategic
management of biomass based clean power generation systems. The model integrates the location, capacity and technology decisions to nd the optimal combination of bioenergy production systems to
meet electricity demand of particular regions and accounts for multiple biomass types and power
technologies. The modelling approach and data analysis are presented to outline the important characteristics of the problem for minimization of the supply chain cost and minimization of the greenhouse
gas (GHG) emissions simultaneously. To handle the multi objective problem efciently, an integrated
approach based on fuzzy decision making and -constraint method is proposed and used, considering
both sustainability aspects and uncertainties in the system parameters. The viability of the proposed
_
approach is explored on a case study of Izmir
region in Turkey. Different supply chain conguration
alternatives are provided for the case study region considering various weights for objective functions
representing relative importance of each objective. Corresponding supply chain performance measures
in terms of total cost and GHG emissions are proposed and discussed for each conguration alternative.
Further enviro-economic analyses denote that discounted investment cost and GHG emissions associated
with energy production activities receive the biggest shares in the total cost and in the total GHG
emissions, respectively. The government and private investors can employ the model and solution algorithm to design the most cost effective and environment friendly supply chain, to monitor the economic and environmental performance of the current biomass based supply chains and identify policies
to support a viable, protable and eco-friendly energy industry.
2016 Elsevier Ltd. All rights reserved.

Keywords:
Investment planning
Strategic management
Clean power generation
Bio-based supply chains
Multiobjective optimization

1. Introduction
The legislative regulations such as the Kyoto Protocol (1997), the
European Union Emission Trading System (2009) and the European
Climate Change Programme (2000), force companies to change the
way they make their decisions and manage their supply chains in
an energy efcient way (Marufuzzaman et al., 2014). Production of
bioenergy, biofuels and bioproducts is one of the most promising
alternative energy pathways that has been rapidly developing in

E-mail address: s.yilmaz@deu.edu.tr.


http://dx.doi.org/10.1016/j.jclepro.2016.07.202
0959-6526/ 2016 Elsevier Ltd. All rights reserved.

many parts of the world.


Biomass is carbon based biological material derived from living,
or recently living organisms available on a renewable basis. As an
energy source, biomass can either be used directly to produce heat
by combustion, or indirectly to produce electrical and/or thermal
energy after converting it to various forms of liquid and gaseous
fuels (i.e. biofuel). For more detailed information about conversion
processes Faaij (2006) can be referred. Biomass has a great potential
as a renewable feedstock for producing various energy forms like
electrical energy, thermal energy and energy carriers (biofuels) by
different kinds of conversion systems with different scales that use
various conversion processes. Biomass to energy supply chain is a

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S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

special form of supply chains that includes biomass to energy


conversion facilities as manufacturing facilities.
In biomass based production, a possible solution to resource
scarcity issues, concerns have been expressed about the economic
and environmental sustainability of the sector. Various biomass
based chains are operated throughout the world. However, the
wide use of biomass based systems has resulted in new challenges
such as long-distance biomass transportation in large-scale networks which results in additional logistics costs, energy consumption and ultimately higher GHG emissions compared to
small-scale utilisation. Robust and integrated supply chains and
logistics networks need to be developed especially in large capacity systems.
These challenges have motivated researchers to develop proper
methodologies to select the most favorable supply chain conguration and to identify cost-efcient abd environment friendly biobased supply chains. Effectively designed renewable based supply
chains can have an economic advantage over non-renewable
sourced systems and eliminate the issues related to sustainability.
In addition, to ensure sustainability in bioenergy systems optimization, usually multiple conicting objectives have to be considered. Also, due to the nature of biomass based energy supply chains,
many uncertainties exist that make the system parameters uctuate in a range, such as biomass supply and price uncertainties,
energy price and demand uncertainties, production and yield uncertainties and transportation uncertainties (Awudu and Zhang,
2012). In many cases feedstock location, processing sites and
product destinations have profound implications for the protability and environmental impacts of the overall supply chain
(Sharifzadeh et al., 2015). Therefore, it is necessary to design robust,
reliable and sustainable supply chains to deliver a competitive end
product to the end used markets and to sustainably meet the everincreasing energy demand. In addition, to cope with the feedstock
and technology related uncertainties effectively, a mixture of
biomass resources and multiple technologies should be taken into
account in the design phase instead of single biomass and technology. Among all the options given for a dened system components and power generation, not all combinations may be sensible
from efciency and economic point of view. Selecting appropriate
process congurations leads to optimal plant design and operation
(Ylmaz and Selim, 2013).
These necessities bring about the main research question of this
paper; how can a biomass based supply chain be optimized in a
sustainable and efcient manner, considering different biomass
types and power technologies and capturing system specic uncertainties in the design phase? Answering this research question,
this paper develops a novel mathematscal model to design sustainable supply chains for multiple biomass based power generation systems to enhance the investment decision making and

Reference

Model
type

Optimization scope

MINLP* Design of optimal supply chain structure with optimal plant


sizes, locations, biomass supply, facility selection and product
distributions.
MILP* Selection of facility location, capacity and technology selection
for biomass to biofuel supply chains as a network of biomass
producers, conversion facilities, and markets.
Lin et al. (2014) MILP
Planning of farm management, logistics activities, facility
allocation and distribution.
Xie et al. (2014) MILP
Locations and capacities of transshipment hubs, reneries and
terminals are determined by the model along with seasonal
feedstock/biofuel storage and shipment amounts.
Zhang and
Wright
(2014)
Marvin et al.
(2012)

strategic planning. The model integrates all activities in a bioenergy


supply chain from feedstock supply to power distribution, and all
elements of the chain from biomass source sites to demand nodes.
The model identies the optimal conguration of the supply chain
and selects the most appropriate power production technology to
meet the electricity demand of given regions to enhance strategic
decision making on bioenergy investments. It covers the decisions
related to location, capacity sizing and technology selection by
capturing the tradeoffs that exist between costs and emissions in
the supply chain. As solution methodology, an integrated approach
is presented that combines fuzzy decision making and -constraint
method, to capture both sustainability aspects by considering
different objectives and uncertainties in the system parameters
effectively. This method reects the characteristics of the problem
on hand. To explore the viability of the proposed model and solu_
tion approach a case study of Izmir,
Turkey is conducted and further
enviro-economic analyses are performed to provide insights to aid
decision makers in strategic planning on bioenergy supply chains.
Computational experiments show that it is enable to provide high
quality solutions in a reasonable amount of time.
The rest of the paper is organized as follows. Section 2 provides a
comprehensive literature review on the studies that develop optimization models for sustainable design of biomass based supply
chains and related it to our study. In section 2, the research gaps in
the current literature are revealed and the contributions of this
study to full these gaps are stated. Section 3 presents the problem
description, formulation of the optimization models and the solution approach. In Section 4, the methodology that integrates fuzzy
optimization and -constraint methods to solve the multi-objective
decision making problems on strategic design and management of
bioenergy supply chains is presented. Section 5 explains the case
study setting where the proposed optimization model and solution
_
methodology are applied to the region of Izmir.
Section 6 proposes
the results, further analyses and discussion. Section 7 discusses the
conclusions along with future research directions.

2. Literature review
Table given below presents a literature review on studies that
develop optimization models to make decisions related to biomass
based supply chains considering economic and environmental
sustainability. Table depicts type of the model developed in each
study, optimization scope of the study, system/process type
considered in the study. The last ve columns of the table shows
that whether the study captures economic and environmental
sustainability aspects, handles single/multi technology and
biomass type, and considers uncertainty in system parameters.

System/
Process
type

Economic Environmental Single/


Single/ Uncertainty
consideration
aspects
aspects
Multitechnology Multi
biomass

Fast
pyrolysis
biorenery
Biofuel

production
Biofuel

production
Bioethanol
production

Single

Single

Single

Single

Single

Single

Single

Single

S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

1181

(continued )
Reference

Model
type

Optimization scope

Marufuzzaman MILP
et al. (2016)

The optimal size and location of chipping terminals and along


with syngas production and transportation decisions are
made.
All components of the supply chain such as crop elds,
Andersen et al. MILP
(2012)
storages, production plants and distribution centers are
optimized.
Zhang and Hu MILP
Determination of facility number, location, capacity and
(2013)
production decisions at operational level such as biomass
collection, fuel production, fuel distribution and inventory
control and allocation for a supply chain design.
Delivand et al. LP* and Determination of optimal facility locations and scales for the
(2015)
MCA* bioenergy production. The study consists of land availability
and suitability analysis to detect a number of appropriate
locations, location allocation analysis that optimal plant
locations were found for each scenario.
Aviso et al.
FLP*
The optimal supply chain design considering the case of
(2011)
multi-region systems that takes into account trade effects.
Lam et al.
MILP
Selection of optimal technologies, plants location, and the
(2013)
annual amount of biomass product considering the objective
functions related to environmental impact, cost functions.
Giarola et al.
MILP
Biomass type selection and supplier allocation, production
(2011)
technology, site selection, capacity assignment and
production planning for bioethanol facilities, logistic
distribution and transportation mode selection issues are
taken into account simultaneously.
Sharifzadeh
MILP
The optimal supply chain design and operational strategies
et al. (2015)
under uncertainty.
Giarola et al.
(2012a,b)

MILP

Giarola et al.
MILP
(2012a,b)
You and Wang MILP
(2011)

~ ezSantiban
Aguilar et al.
(2011)
Li and Hu
(2014)
Shabani and
Sowlati
(2016)
power
generation

MILP

Optimize the environmental and nancial performances


simultaneously by considering a wide set of alternative
production technologies and specic geographical features.
Strategic design and planning of feasible and sustainable
multi-echelon bioethanol supply chains.
Conversion pathways and technologies, feedstock seasonality,
geographical diversity, biomass degradation, infrastructure
compatibility, demand distribution, and government
incentives are optimized.
Selection of optimal feedstock, processing technology and
product combinations.

MISP*

Capital investment and logistics decisions are made.

MISP

Tactical supply chain planning of a power plant considering


uncertainties in the quality of biomass.

System/
Process
type

Economic Environmental Single/


Single/ Uncertainty
consideration
aspects
aspects
Multitechnology Multi
biomass

Gasication

Single

Single

Biodiesel

production

Single

Single

Biofuel

production

Single

Single

Bioenergy
production

Single

Multi

Biofuel
e
production
Biofuel
e
production

Multi

Multi

Multi

Multi

Bioethanol
production

Single

Multi

Fast
pyrolysis
biorenery
Bioethanol
production

Single

Single

Single

Single

Bioethanol
production

Liquid
biofuel
production

Single

Single

Multi

Single

Biofuel

production

Multi

Multi

Bio-oil

gasication
Forestbased
biomass to
Single
Single

Single

Single

*MINLP: Mixed Integer Nonlinear Programming; MILP: Mixed Integer Linear Programming; LP: Linear programming; MCA: Multi criteria analyses; FLP: Fuzzy Linear Programming; MISP: Mixed Integer Stochastic Programming.

Literature review ndings suggest that, the vast majority of the


researches focus only on biomass to biofuel supply chains without
conversion to electrical and/or thermal energy. However, in real
world applications biofuel, which is obtained from multiple sources
of biomass, is commonly converted to energy in bioenergy plants
by power engines. Also, most of the models capture one type of
biomass and one type of conversion technology/process (thermochemical or biochemical), which makes them problem specic. In
addition, the literature review reveals that, none of the methodologies in the literature integrates the strategic decisions related to
location, capacity and technology selection for both bioenergy
plants and preprocessing facilities with tactical decisions on production and transportation of biomass and bioenergy. Also, it can
be concluded that, none of the current studies develop and use an
optimization methodology that integrates economic and environmental sustainability issues with uncertainty consideration in the
same framework in design phase.

To sum up, review of the literature suggests that, there is a need


to develop a comprehensive strategic planning approach to
congure biomass based supply chains taking into account multiple
biomass types and conversion technologies by integrating sustainability and uncertainty aspects in design phase. In addition, we
can conclude that, there is a need to develop a generalizable model
that aids to optimize cases related to investment decision making
on biomass based supply chains that include both biomass processing facilities and energy production systems by only changing
the dataset.
By addressing these gaps in the literature, this study contributes
to the related body of knowledge mainly in two ways. The rst
contribution is proposing a new optimization model in the multiobjective framework for the strategic decision making in multiple
biomass and multiple technology based power production system
investments, to minimize the total cost while simultaneously
minimizing the harmful environmental impacts in terms of GHG

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S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

emissions. The main novelties in the proposed model are; (1) It is


generalizable as it covers conversion of multiple types of biomass
into energy to meet the power demand of particular region(s) and
covering multiple types of conversion technologies/processes, (2) It
integrates decisions related to both power plant technology and
preprocessing facility type. The second main contribution is presenting an integrated approach incorporating fuzzy decision making and -constraint methods to solve the presented multi-

20
Min f1 DF 4@
"

"

J X
E X
C
X

Yec $Kec $Xec A @


j

j1 e1 c1
J P
E P
C
P
j1 e1 c1

i1 j1 c1 b1

Fb ,Rijcb 5

4

K X
P X
T
X

0
@

K X
P X
T
X

00

Cb ,@@

b1

Eq. (1) represents the rst objective function;

k A5
Ypt $Kpt $Zpt

13
k A5
Ppt $K1pt $Zpt

k1 p1 t1
B
X

Total Supply Chain Cost Discounted Investment


Costs Operational Costs Transportation Costs Biomass Purchasing Cost Auxiliary Material Cost

13

k1 p1 t1

j
Pec $DK2ec $Xec A

J P
I P
C P
B
P

The rst objective function, namely minimization of total


monthly supply chain cost, can be calculated as follows;

J X
I X
C
X

(1)

Rijcb ,dij A

i1 j1 c1

J X
K X
T
X

113
Rjk
,djk AA5
tb

j1 k1 t1

K
X

!
k

S ,FW

k1

objective problem by capturing the problem specic uncertainties


and sustainability aspects simultaneously.

3. Methods
3.1. Problem description and formulation of the models
This paper focuses on designing an optimized supply chain for
multi biomass based energy production considering sustainability
aspects. The supply chain in consideration consists of the biomass
source sites to supply multiple types of biomass, facilities for
preprocessing of biomass, facilities for storage of biomass,
biomass to electricity conversion plants, electricity demand
nodes.
We developed a MILP model that captures economic and environmental aspects by a multiobjective structure. The model, aims to
design the biomass based energy supply chain by making decisions
corresponding to; (1) conguration of the supply chain network (2)
procurement and allocation of the biomass resources; and (3) inventory, production and distribution planning, to meet the electrical
energy demand of (a) particular area(s). The model determines the
optimal conguration of the supply chain considering the tradeoffs
between costs and GHG emissions associated with production activities. The decisions made by the model are;
1.
2.
3.
4.

Numbers, locations and capacities of facilities, power plants,


Types of facilities and technologies for power plants,
Amounts electricity produced in each power plant,
Amounts biomass distributed between biomass source sites,
facilities and plants,
5. Amount of biomass treated/stored in facilities,
6. Amount of auxiliary material consumed in power plants.
As stated before, a multiobjective model is proposed to reect
the multidimensional nature of the biomass based energy supply
chain conguration design problem under concern. The model includes three environmental and economic objectives. The objectives are: (1) minimization of total cost; and (2) minimization of
GHG emissions (CO2 eq) related to transportation and production in
the supply chain. The notations of the mathematical formulations
are presented in Appendix 1.

Eq. (2) shows the second objective function, namely minimization of GHG emissions associated with energy production, which
includes (1) GHG emissions from plants associated with production
of energy, (2) GHG emissions associated with transportation of
biomass.

Min f2

T
X

cept $

t1

J
X

K
X

T
X

B
X

4cet @

k1
K
X

!!
k

13

J X
I X
C X
B
X

Rijcb

i1 j1 c1 b1

Rtb A5
jk

j1 k1 t1 b1

(2)
Eqs. (3)e(13) represent the constraints of the model.
J
C X
X

ij

Rcb  ABib

ci; cb

(3)

c1 j1

I X
C
X

Rijcb $vbc

i1 c1

I X
B
X

jk

Rtb 

j1 b1

cj; cb

(4)

P
X

k
Zpt
$Kpt

ck; ct

(5)

cj; cc

(6)

ck; cf ; ct

(7)

p1

ij

Rcb 

E
X

Xec $Kec

e1

i1 b1

J X
B
X

Rjk
tb

k1 t1

i1 b1

I X
B
X

K X
T
X

jk

Rtb $rbft Bkft

S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

T X
F
X
t1 f 1

Ek 

Xftk $efn

P
X

k
Zpt
$KEpt

ck

ck

(8)

(9)

p1

Ek

L
X

DEkl

ck

(10)

cl

(11)

l1
K
X

DEkl T l

k1
P X
T
X

k
Zpt
1

ck

(12)

cj

(13)

p1 t1
E X
C
X

Xec  1

e1 c1

Eq. (3) restricts the biomass procurement amount from a supply


region by the total available biomass in that region. Eq. (4) ensures
the ow balance of the biomass supplied from biomass source site
to facility and from facility to biomass to energy conversion plant
considering the material loss in the biomass after the pretreatment
process (if the facility is for storage of biomass, the conversion rate
dbc is 1, which means no loss). Eqs. (5) and (6) limit the amount of
biomass transported to the facilities and plants to the maximum
capacity of the corresponding capacity levels of plants/facilities. Eq.
(7) calculate the amount of biofuel produced in biomass to energy
conversion plants. Eqs. (8) and (9) calculate the amount of electrical
energy produced in biofuel to energy conversion plants and restrict
this amount to the maximum capacity of the corresponding capacity levels of plants. Eqs. (10) and (11) ensure that all the electrical energy demand is met in the demand nodes. Eqs. (12) and
(13) ensure that at most 1 facility, biomass to biofuel conversion
plant and biofuel to energy conversion plant is constructed in each
selected location.
3.2. Solution methodology
In this section, the methodology which is employed to solve the
multi-objective strategic design and management problem by
integrating fuzzy decision making and -constraint methods is
explained.
There are several common techniques to solve a multiobjective
problems, such as the weighted-sum method, the -constraint
method, the goal attainment approach, and metaheuristics (Kindt
and Billaut, 2001). Among them, weighted sum method is the
method commonly used for economic/environmental management
problems compared with other optimization approaches established previously (Moghaddam et al., 2011, 2012). However, a wellorganized method to deal with multi-objective problems is
-constraint method (Haimes et al., 1971) which is aimed to minimize only one objective function (commonly, it may be the most
preferred or primary one) and to limit the others by some allowable
values i ; i2f1; :::; mg, and in this way, transforming the multiobjective optimization problem into a single-objective problem.
The -constraint method has several advantages over the
weighting method that merges the objective functions of the multiobjective problem into one objective function using weighted sum.

1183

The main advantages of the -constraint technique can be summarized as follows;


(1) Using the weighted sum method, only efcient extreme solutions can be generated, while the -constraint technique
has the capability to generate nonextreme efcient solutions
in the feasible solution space (Rezvani et al., 2015). As a
consequence, with the weighting method we may spend a lot
of runs that are redundant in the sense that there can be a lot
of combination of weights that result in the same efcient
extreme solution. On the other hand, with the -constraint
we can exploit almost every run to produce a different efcient solution, thus obtaining a more rich representation of
the efcient set (Miettinen, 1998).
(2) The weighting method cannot produce unsupported efcient
solutions in multi-objective integer and mixed integer programming problems, while the e-constraint method does not
suffer from this pitfall (Reza Norouzi et al., 2014).
(3) In the weighting method the scaling of the objective functions has strong inuence in the obtained results. Therefore,
we need to scale the objective functions to a common scale
before forming the weighted sum. In the e-constrained
method this is not necessary (Mavrotas, 2009).
(4) We can control the number of the generated efcient solutions by properly adjusting the number of grid points in each
one of the objective function ranges by econstraint
method, which is not easy with the weighting method
(Mavrotas, 2009).
Therefore, the -constraint method seems to be a good choice to
solve multi-objective optimization problems.
Assume the following MOMP problem (Mavrotas, 2009):

max=min
st x2S

f1 x; f2 x; fm x

where x is the vector of decision variables, f1 x; f2 x; fm x are


the m objective functions and S is the feasible region.
In the -constraint method we optimize one of the objective
functions using the other objective functions as constraints incorporating them in the constraint part of the model as shown below
(Chankong and Haimes, 1983);

max =min f1 x
st f2 x  2 for max functions;
f3 x  3 for min functions;

fm x  m ;
x2S:
By introducing the ranges i ; i2f1; ; mg of objective functions
the efcient solutions of the problem are obtained.
Despite its advantages over the weighting method, it is emphasized in the literature that the -constraint method has two points
that need attention in its implementation (Ahmadi et al., 2014). The
rst problem is with the calculation of the ranges of objective
functions over the efcient sets. To overcome this decit, this study
employed a fuzzy logic based procedure to determine the ranges
more realistically and considering the system uncertainties. The
second problem with this technique is that the generated pareto
optimal solutions using this method may be dominated or inefcient; therefore, it is necessary to select the most efcient one among
them. Fuzzy decision making is utilized herein to eliminate this
shortcoming.
In this paper a modied version of the -constraint method is
proposed to address these issues by combining the method with

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S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

fuzzy decision making. The modied -constraint method for the


proposed problem is described as the following steps;
Step 1. Problem P in Section 2 can be transformed into problem P0
according to the basic principles of the -constraint method. In P0,
the objective function is corresponding to f1 of P, and f2 of P is dealt
with as a constraint of P0. Problem P0 can be represented as follows:

emission minimization objectives, for each solution k, the membership degree mki is calculated based on its individual membership
functions by adding weight factors as follows:

min f1 x
st f2 x  2 ;
and constraints 3  13

The solution with the maximum value of mki is selected as the


most preferred solution.

Step 2. To solve problem P0, we need to determine 2 (upper


bound for the second objective function) that is limited by the range
of objective function f2. To obtain the appropriate range of f2, multi
objective model P in Section 2 is solved as a single objective problem
using each time only one objective and ignore the other to specify
the efcient solutions (i.e. upper bound, expected value and lower
bound) for f2. For this purpose, a fuzzy logic based procedure is
introduced and the problem is divided into sub problems. Each time,
one of the upper, lower and expected values of the fuzzy parameters
are taken into consideration and sub problems are solved according
to either cost minimization or emission minimization objectives.
Step 3. The payoff table is constructed which is an asymmetric
matrix where the matrix elements represent the optimum values of
the corresponding objective function. The lower, upper and expected values of each objective function are determined based on
the payoff table.
Step 4. Repeat to solve problem P0 with different values of 2 (i.e.
upper, expected and lower values from the payoff table), and nally,
obtain a set of pareto optimal solutions.
Step 5. After a set of pareto optimal solutions are obtained, a
decision maker may wish to select a preferred one from them and
may also want to know its degree of optimality. The fuzzy-logicbased approach (Esmaili et al., 2011) can both provide a most
preferred solution and also indicate its degree of optimality.
Therefore, in this paper, it is applied to assist in choosing a
preferred solution. In the m-objective optimization problem with k
pareto optimal solutions, the membership function mki indicates the
degree of optimality for the ith objective function in the kth solution. It is dened as follows;
1. In the case of objective functions being minimized;

8
>
1
>
>
>
>
<
k
mki ui  fi x
>
ui  li
>
>
>
>
:
0

fik x  li
li < fik x  ui

;
;

fik x > ui

2. In the case of objective functions being maximized;

8
>
1
>
>
>
>
< k
mki fi x  li
>
u i  li
>
>
>
>
:
0

fik x > ui
li < fik x  ui

;
;

fik x < li

where li and ui denote the lower and upper limits of objective


function fi of P, respectively, and fik x represents the value of the ith
objective function in the kth pareto optimal solution, such that
fik x2li ; ui .
Step 6. If a decision maker offers a preferred weight vector, which
represents the relative importance of each objective according to the
decision maker's preferences, for the cost minimization and

mki

Pm

i1
P
m

wi $mki

i1

wi

3.3. Computational experiments


3.3.1. Case study region and biomass sources
To explore the viability of the proposed model, computational
experiments are performed on a real-world problem in Turkey. In
this regard, we aim to design a supply chain network for biomass
_
based energy production in Izmir,
which is the third largest city in
Turkey. As agriculture and stockbreeding are among the most
_
common economic activities in Izmir,
diverse set of biomass bio_
waste feedstock resources are available in Izmir
for energy pro_
duction. More specically, Izmir is the second largest producer in
Turkish poultry sector and has the fourth largest biogas production
potential from animal wastes in Turkey. The proposed model is
_
_
applied to all 20 counties of Izmir.
All of the counties of Izmir
are
considered as biomass supply sites and candidate sites for bioenergy plants and preprocessing facilities in the model. The map of
the case study region is depicted in Fig. 1. Each county is represented by a number in the model as depicted in Fig. 1. The starred
counties on the map constitute the city centre, therefore considered
as one county in the model.
The proposed model includes four types of waste biomass to be
transformed into energy; cattle manure, laying chicken manure and
broiler chicken manure, and waste wood. The resources are not uniformly distributed in the city, their yields vary signicantly between
_
counties of Izmir.
The existing feedstock annual yields and location
data are gathered from Republic of Turkey Ministry of Food, Agriculture and Livestock and have been aggregated at county centroids.
3.3.2. Transportation
Given the regional focus in our case study, road transport is
considered as the preferred transportation mode as it is the most
_
common transportation mode in Izmir.
In this scope, transportation
by a single trailer truck with a load capacity of 32 tons is considered.
Currently, road transportation is the most common method for
biomass delivery especially for distances <110 km (Searcy et al.,
2007). Road transportation is favorable when exibility is required
and multiple forest and farm sited have to be accessed. Waste
biomass with high solid content (laying chicken manure and wood
waste) is considered as solid biomass, while feedstock with low total
solid content (cattle manure, broiler chicken manure) is considered
as liquid/semi-solid biomass. Biomass sources are transported by
trucks with the cost of V0.045/t-km for solid biomass and V0.05/tkm for liquid/semi-solid biomass. The cost data is derived from
Marufuzzaman et al. (2014) for liquid/semi solid biomass and from
Lu et al. (2015) for solid biomass and updated for the local conditions
considering the data gathered from local logistics rms. Data on
GHG emissions associated with transportation of biomass by trucks
is gathered from Marufuzzaman et al. (2014) and supported by the
data obtained from LCA software SIMAPRO.
3.3.3. Preprocessing facilities and bioenergy plants
Collection and pretreatment facilities to store, treat and
distribute biomass are considered as preprocessing facility types.
Cattle manure, laying chicken manure, broiler chicken manure and
maize are assumed to be collected and distributed via collection

S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

1185

Fig. 1. The map of case study region.

centers whereas pretreatment facilities are used to treat waste


wood to convert into wood pellet, which is a more efcient biomass
with higher solid content than waste wood, by drying process.
Anaerobic digestion (AD) and gasication (G) technologies are
considered to convert biomass into energy. AD is utilized to produce biofuel (biogas) from cattle manure, laying chicken manure
and broiler chicken manure, which then be converted into electrical
energy by CHP engines. Biofuel (syngas) produced from waste
wood by G is assumed to be transformed into electrical energy in
CHP engines as well.
To ensure the efciency of biogas production process in the AD
plants, the total solid content of biomass slurry in the fermentation
tank should vary between 7% and 12%. To represent this technical
limitation, Eq. (14) is added to the model in Section 2 as a case
specic contraint;

PJ
7% 

PB

PT

PB

PT

b1

j1

PJ
j1

b1

t1

TSb  Sjk
! tb

jk
t1 Stb

 12%

ck

where, TSb is the total solid content of biomass b and W k is the


amount of water (auxiliary material) used to adjust the total solid
content of the biomass mixture in the anaerobic digestion tank.
The other data and assumptions on facilities and plants are;
1. The electrical efciency of the cogeneration units are taken as
40%.
2. The conversion rate of waste wood to wood pellet is to be 80%.
3. The generated electrical energy, is assumed to be fed into the
national electricity grid.
4. Two capacity levels are considered for the pretreatment facilities and biomass to energy conversion plants. These capacity
levels reported in Table 1.
Data on GHG emissions associated with bioenergy production in
plants (including conversion in CHP units) are gathered utilizing
LCA software SIMAPRO and DECC (2015).

(14)

Wk

3.3.4. Economic parameters


The generated electrical energy by the plants is fed into the
national electricity grid with a price of V0.103/kWh. Seven demand

Table 1
Capacity levels and unit investment costs per installed capacity depending on capacity levels of the plants.
Capacity Total biomass capacity of G Installed capacity of cogeneration Total biomass capacity of AD Installed capacity of cogeneration
level
plants (t/month)
unit in G plant (kWe)
plants (t/month)
unit in AD plant (kWe)

Total biomass capacity of PT


facilities (t/month)

1
2

1750
2250

3000
5000

Capacity
level

Unit investment cost of G


plants (V/ton)

Unit investment cost of CHP unit


in G plant (V/kWe)

Unit investment cost of AD Unit investment cost of CHP unit in Unit investment cost of PT
plants (V/ton)
AD plant (V/kWe)
facilities (V/ton)

1
2

20,000
18,000

800
750

1600
1500

4500
6000

9000
10,000

2750
3250

800
750

1000
750

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S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

nodes are considered in the different locations around the city to


meet the corresponding electrical energy demand. The price and
demand data came from Republic of Turkey Ministry of energy and
Natural Resources. It is assumed that waste biomass is supplied by
the local farmers at no charge. Monthly discount rate is taken as
0.006 and lifetime of the plants are 20 years. The length of the time
period used in our computational experiments is one month.
We obtain the data on plant investment costs corresponding to
different plant capacity levels by a survey on AD and G plant installations around the Europe and by utilizing professional expert

4.1. The optimized supply chain conguration


The optimized supply chain conguration is determined by the
modied -constraint method taking the steps given in Section 4.
This section describes the optimized supply chain conguration
determined by applying the model and solution algorithm.
The payoff table is obtained as described in Section 4 (Steps 2
and 3). Table 2 depicts the payoff values according to each objective
function and the upper, lower and expected values of the fuzzy
parameters (see Section 5.5).

Table 2
The payoff values according to each objective function.
Min. Cost

Upper bound

Expected value

Lower bound

Cost (V/Month)
GHG emissions (kg CO2 eq)

789,003
154,275

717,275
147,064

645,548
132,562

Min. GHG emissions

Upper bound

Expected value

Lower bound

Cost (V/Month)
GHG emissions (kg CO2 eq/Month)

3,822,542
150,272

3,474,857
146,641

3,127,371
124,371

opinion. Do et al. (2014) is also utilized to derive the data. The investment costs per kilowatt of installed power are taken into
consideration in a manner that they decrease with higher capacities
because of economies of scale. The investment costs per kilowatt of
installed power depending on capacity levels and counties are reported in Table 1. Annual operational costs of plants and storages are
taken as 5% of investment costs. This percentage is also obtained by a
survey on biogas plant installations and storages and by utilizing
professional expert opinion. It should be noted that, unit costs are
computed considering monthly capacity of the facilities and plants.
3.3.5. Uncertainty treatment
In practical cases on biomass based energy systems, system
parameters are affected signicantly by economical, social and
environmental policies as well as the uctuations in the market
conditions. Considering this fact, uncertainties in the following
parameters of which values are highly impacted by governmental
policies, competition between rms in the related market and
natural conditions about weather, soil etc are handled and
included to the methodology in this study;
1. Investment and operational costs
2. Transportation costs
3. Biomass yields
Therefore, we dene the coefcients in the model corresponding
to each of the above mentioned parameters within a range. The lower
and upper bounds for these coefcients are assumed to be 90% and
110% of their expected values in our computational experiments.
4. Results and discussion
This section presents the results of the computational experiments, provides further analyses of the results and a discussion on
the viability of the proposed methodology along with some
managerial insights. The proposed mathematical model and solution methodology are coded in ILOG CPLEX Optimization Studio
(Version 12.2). The numerical experiments were performed on an
Intel Core Quad 2.66 GHz processor with 6 GB RAM on a 64-bit
platform under Windows 7 environment. The large-scale MILP
model is composed of 1347 constraints and 7641 variables (of
which 160 are integer variables).

After obtaining the payoff table, the mathematical model is


solved with six different values of 2, which are depicted in italic
characters in Table 2, and a set of pareto optimal solutions is obtained. Table in Appendix 2 reports the pareto optimal solutions
according to each 2 values (upper limit for GHG emissions), along
with the strategic supply chain decisions related to decisions location, capacity and technology of bioenergy plants and preprocessing
facilities according to each solution. The table also depicts the corresponding membership function (mk ) values for each solution
alternative. The membership function values are calculated as
described in Section 4 (Step 5), based on three different weight
structures for the objective functions, to reect the relative importance of the objectives and provide the DM for a more condent
solution set; wCost 0.3 and wGHG Emissions 0.7 (WS1), wCost 0.5
and wGHG Emissions 0.5 (WS2), wCost 0.7 and wGHG Emissions 0.3
(WS3).
The table in Appendix 2 provides a broader perspective to decision makers by offering the results of the alternatives with three
different weight structures. Decision makers from different sectors
(governmental units or private companies) can choose the best
alternative according to their preferences related to objective
functions (costs vs. emissions). The main results that can be obtained from the table are summarized in the following;
1. If minimization of GHG emissions is more important than minimization of costs for a decision maker, the rst weight structure
(WS1) should be adopted (wCost 0.3 and wGHG Emissions 0.7)
and the optimal solution should be selected as the solution with
the highest mk value corresponding to this weight structure. From
the table, it can be observed that the optimal solution for this
situation is the 6th solution alternative (V3,748,708/Month total
cost and 124,371 kg CO2 eq/Month GHG emissions). In this situation, 1 collection centre with 2nd capacity level, 1 pretreatment
facility with 2nd capacity level and 1 pretreatment facility with
1st capacity level is constructed in Menemen, Merkez, Torbali,
respectively. Dikili and Urla are the selected counties for construction of 1 AD plant in each with 2nd capacity level, and
Selcuk, Bergama and Menemen are the counties for construction
of 1 G plant in each with 2nd capacity level.
2. If minimization of GHG emissions and minimization of costs are
equally important for a decision maker, the second weight
structure (WS2) should be adopted (wCost 0.5 and wGHG
Emissions 0.5) and the optimal solution should be selected as the

S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

solution with the highest mk value corresponding to this weight


structure, that is the 1st, 2nd or 4th solution (V717,275/Month
total cost and 147,064 kg CO2 eq/Month GHG emissions) in this
case. The conguration results of this solution alternative are; 1
collection centre with 1st capacity level and 1 pretreatment
facility with 2nd capacity level are constructed in Merkez and
Torbali, respectively. Dikili and Urla are the selected counties for
construction of 1 AD plant with 1st capacity level, 1 G plant in
each with 1st capacity level, respectively.
3. If minimization of minimization of costs is more important than
GHG emissions for a decision maker, the third weight structure
(WS3) should be adopted (wCost 0.7 and wGHG Emissions 0.3). It
can be observed from the table that the optimal solution for this
situation is the 1st, 2nd or 4th solution alternatives (V717,275/
Month total cost and 147,064 kg CO2 eq/Month GHG emissions).
The conguration results of this solution are; 1 collection centre
with 1st capacity level and 1 pretreatment facility with 2nd
capacity level are constructed in Merkez and Torbali, respectively. Dikili and Urla are the selected counties for construction
of 1 AD plant with 1st capacity level, 1 G plant in each with 1st
capacity level.

4.2. Enviro-economic analyses


Enviro-economic analyses are presented to provide a deeper
understanding of the model and the results obtained by the proposed solution methodology. If the results of the 1st, 2nd or 4th
alternatives in the table in Appendix 2 are compared to those of the
3rd alternative, it can be realized that a 9.86% decrease in total GHG
emissions can be attained with 367.51% increase in total cost. We
have observed similar percentages when we compare the 1st, 2nd or
4th alternatives with the 5th and 6th solution alternatives as well.
However, if the results of the 5th alternative are compared to those
of the 6th alternative, it can be realized that a 15.19% decrease in
GHG emissions can be attained with 6.63% increase in the total cost.
It can also be concluded from the table that, the total cost and
amount of GHG emissions do not differentiate between the values of
154,275, 150,272 and 147,064 for 2 as well as the conguration of
the supply chain, in other words the locations and capacities of
bioenergy plants and preprocessing facilities. However, giving 2
values smaller than 147,064 such as 146,641, 132,562 and 124,371
effects the total cost, GHG emissions and conguration of the supply
chain. The table reveals that decreasing the 2 value from 154,275 to
132,562 kgCO2eq/Month by 14%, causes a signicant increase in the
total cost, approximately by 367.51%, whereas a relatively small
decrease is observed in the GHG emissions by 9.8%. However, a
further decrease in 2 value from 132,562 to 124,371 kgCO2eq/
Month by 14% makes the GHG emissions decrease by the same

Fig. 2. The contribution of each cost component to the total supply chain cost according to WS1 (wCost 0.3 and wGHG Emissions 0.7).

1187

Fig. 3. The contribution of each cost component to the total supply chain cost according to WS2 (wCost 0.5 and wGHG Emissions 0.5) and WS3 (wCost 0.7 and wGHG
Emissions 0.3.

percentage (14%) and results in an increase of total cost by 11.8%.


Figure 2 and 3 illustrates the contribution of each cost component (Discounted investment cost, operational cost, transportation
cost and auxiliary material (in our case, water) cost to the total
supply chain cost according to the weight structures given in Section 6.1. The results denote that, discounted investment cost receives the biggest share of total cost for all weight structures, which
is followed by operational costs. The effects of transportation cost
and auxiliary variable cost on the total cost is negligible when
compared to investment and operational costs.
Further analyses on environmental impacts in terms of GHG
emissions from production and transportation activities in the
supply chain denote that GHG emissions associated with energy
production activities receive the biggest share of total GHG emissions. If the rst weight structure (WS1) is selected by the decision
maker, the related optimal conguration alternative causes 124,323
kgCO2eq/Month GHG emissions from production activities while
the transportation related GHG emissions are 48 kgCO2eq/Month.
When one of the second or third weight structures (WS2, WS3) is
selected, the GHG emissions associated with production and
transportation activities are 146,543 kgCO2eq/Month and 501
kgCO2eq/Month, respectively.
5. Conclusions
This study presents a new research effort to make strategic investment decisions on biomass based production systems in a cost
effective and environment friendly way. To this aim, a multiobjective
MILP model is developed to make decisions on the biomass supply
chain design and planning. The model identies the optimal structure of the supply chain and selects the most appropriate power
production technology as well as the preprocessing plant type to
meet the electricity demand of specic regions considering objectives related to the economic and environmental performance of the
supply chain. The model represents all of the supply chain activities
from biomass procurement to bioenergy production, and considers
economic and environmental objectives in an uncertain decision
environment. A methodology to solve multiobjective decision
making models is proposed and applied to the current problem on
bioenergy decision making. The methodology that combines fuzzy
decision making and -constraint methods in a novel way to capture
the trade-offs between the objectives effectively besides the system
specic uncertainties. Through computational experiments on a
_
multi biomass based energy supply chain design in Izmir,
Turkey, the
viability of the proposed model and solution methodology are
demonstrated. By further analyses, it is revealed that discounted
investment costs and operational costs receive the biggest share in
the total supply chain cost, whereas the energy production activities
have higher impact on GHG emissions than transportation activities.
This study distinguishes from the current literature in several

1188

S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

ways. First, it proposes a new optimization model for strategic


management in multiple biomass and multiple technology based
supply chains that include both power plants and biomass processing facilities to enhance investment decision making. The
proposed model is generic in its structure and can be tailored to
handle bioenergy supply chain design problems in various regions
with different types of feedstock and transportation modes using
the same general framework. The model can be readily extended to
include additional, case-specic constraints required by the
problem. Second, it presents an integrated approach incorporating
fuzzy decision making and -constraint methods to solve the presented multi-objective problem by capturing the problem specic
uncertainties and sustainability aspects simultaneously. To our
knowledge, this is the rst study to develop a solution approach
that combines fuzzy decision making and -constraint methods to
capture both sustainability aspects by handling multiple objectives
and uncertainty in the system parameters in this eld.
The results of the case study reveal that the proposed model and
solution algorithm can effectively be used in practice, to obtain the
economic and environmental benets from biomass based energy
supply chain design. The government and private investors can
employ our mathematical model and solution algorithm to design
the most cost effective and environment friendly supply chain to
meet energy demand of a specic region(s) and estimate the cost
and harmful environmental effects that generated in a particular
region by constructing the supply chain. The model also facilitates
identifying policies to support a viable, protable and eco-friendly
Indices
i
j
k
l
b
f
p
e
t
c

bioenergy industry. For example, it is possible for the model and


solution methodology to be used for policy making purposes for
governmental units to provide an overall guidance on targets for
bioenergy production considering energy demands and environmental footprint limitations in a given region. However, the same
framework can also be applied at the company level, for use by a
single enterprise for strategic planning of its own activities under
similar production and environmental targets. Note that these two
problems are structurally similar, although the signicance of the
applications is markedly different.
Future research can extend the study by integrating the problem
with a district heating network to make use of the waste heat in
residential, industrial or agricultural areas to meet thermal energy
demand. Also, different modes of transportation (rail, sea etc)
can be included and the model can be extended to select the most
appropriate mode for a given region. The model can be extended to
capture the stochastic nature of biomass supply and technology
development by converting it to a Stochastic Programming model.
Including additional objectives in the proposed model may be
another extension of this study. In this regard, other environmental
objectives related to energy efciency and land use as well as social
objectives such as maximization of job creation or social acceptability of the energy conversion system, may be considered.
Appendix 1. The notations of the mathematical formulations.

Biomass source sites


Candidate locations for facilities
Candidate locations for energy plants
Demand nodes
Biomass types
Biofuel types
Capacity levels for energy plants
Capacity levels for facilities
Energy conversion technology
Facility type

Decision variables
1. Binary variables
k
Zpt

1 if an energy plant of capacity level p and technology t is located at k, 0 otherwise

j
Xec

1 if a facility of capacity level e and type c is located at j, 0 otherwise

2. Positive variables
Rcb ; Rtb

Amount of biomass b shipped from; biomass source site i to facility j with type c, facility j to energy plant k with technology t (ton)

DEkl

Amount of electricity produced in plant k to meet demand of node l (kWh)

Ek

Amount of electricity produced at plant k (kWh)

Bkut

Amount of biofuel u produced at plant k with technology t (m3)

Sk

Amount of auxiliary material consumed at energy plant k (ton)

ij

jk

Parameters
1. Biomass supply and product demand
Amount of electricity demand at demand node l (kWh)
Tl
ABib
2. Capacities
Kpt ; Kec
KEpt
3. Costs and prices
Ypt ; Yec
Ppt ; Pec
Fb ; FW
Cb
4. Distances
dij ; djk
5. Conversion rates
vbc
eb
rbut

Amount of available biomass b at biomass source site i (ton)


Biomass capacity of; energy plant of capacity level p with technology t, facility of capacity level e with type c
Installed electrical capacity of plant of capacity level p with technology t (kWe)
Unit
Unit
Unit
Unit

investment cost of; energy plant of capacity level p with technology t, facility of capacity level e with type c (V/ton), CHP (V/kWh
operational cost of; energy plant of capacity level p with technology t, facility of capacity level e with type c (V/ton), CHP (V/kWh)
cost of biomass b, auxiliary material (V/ton)
cost for transportation of biomass b (V/ton-km)

Distances from; biomass source site i to facility j, facility j to plant k (km)


Conversion rate of biomass b in facility with type c (%)
Conversion rate of biomass b to electricity (kWh/m3)
Conversion rate of biomass b to biofuel u produced by technology t (m3/ton)

S.Y. Balaman / Journal of Cleaner Production 137 (2016) 1179e1190

1189

(continued )
6. Carbon emissions
cept
cet
7. Other parameters
DF

GHG emissions associated with 1 kWh of electricity production by technology t (kg CO2 eq)
GHG emissions associated with 1 ton of biomass transportation (kg CO2 eq)
Discounting factor

Appendix 2. The pareto optimal solutions according to each


2 values and corresponding conguration decisions.

Value of 2
Pareto
optimal
(kg CO2 eq/
solution no. Month)

Cost
GHG emissions
(V/Month) (kg CO2 eq
(V/Month)

Strategic decisions for


preprocessing facilities

154,275

717,275

147,064

147,064

717,275

147,064

132,562

3,353,316 132,562

150,272

717,275

146,641

3,515,713 146,641

124,371

3,748,708 124,371

Dikili e 1 AD plant 1. capacity


level,
Bayndr e 1 G plant
1. capacity level
Dikili e 1 AD plant 1. capacity
level,
Bayndr e 1 G plant
1. capacity level
Bergama, Menemen, Urla e 1
AD plant in each 2. capacity
level
Beydag,
Foca e 1 G plant in each 1.
capacity level
Dikili e 1 AD plant 1. capacity
Merkez e 1 collection
level,
centre 1. capacity level,
Bayndr e 1 G plant
Torbal e 1 pretreatment
1. capacity level
facility 2. capacity level
Bergama, Seferihisar, Merkez
Beydag, Cesme e 1
collection centre in each 1. e 1 AD plant in each 2.
capacity level,
capacity level,
Urla e 1 collection centre 2. Selcuk, Urla e 1 G plant in
each, 2. capacity level
capacity level,
Merkez e 1 pretreatment
facility in each 2. capacity
level
Dikili, Urla, e 1 AD plant in
Menemen e 1 collection
each 2. capacity level,
centre 2. capacity level,
Selcuk, Bergama,
Merkez e 1 pretreatment
Menemen e 1 G plant in each,
facility 2. capacity level
2. capacity level
Torbali e 1 pretreatment
facility 1. capacity level

147,064

Merkez e 1 collection
centre 1. capacity level,
Torbal e 1 pretreatment
facility 2. capacity level
Merkez e 1 collection
centre 1. capacity level,
Torbal e 1 pretreatment
facility 2. capacity level
Bergama, Merkez e 1
collection centre in each 2.
capacity level
Bayndr e 1 pretreatment
facility, 2. capacity level

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