Addressing a robust decision in the sugarcane supply chain: Introduction of a new agricultural investment project in Colombia

Abstract

The aim in new agricultural investment projects is to achieve a proper balance between customer value creation and investor economic benefits. Several authors have highlighted the importance of integrating agroindustrial supply chain operations, as a way to improve competitiveness. In the specific case of sugarcane, most research only integrates harvest and transport operations, lacking simultaneous analysis of sowing, growing and harvesting. Also, from the perspective of sugarcane supply chain planning, few contributions undertake tactical and strategic decisions. This paper proposes an optimization model for sugarcane supply chain planning, integrating several agricultural decisions from a strategic-tactical planning perspective. The uncertainty effects generated by weather conditions were also considered. As a main contribution, the model establishes a set of agricultural decisions that maximize cane yield, in order to optimize the Net Present Value (NPV) of expected profits. The proposed model is utilized to evaluate the feasibility of a new biofuel production plant in Colombia. Results allowed for the identification of critical variables to control, in order to reduce investment risk.