Impact of inventory management on demand fulfilment, cost and emission of forest-based biomass supply chains using simulation modelling

Abstract

Biomass has emerged as an attractive renewable source of energy to shift away from fossil fuels. The high cost of biomass feedstock and variations in its availability and quality are among the key barriers in bioenergy and biofuel development. Therefore, it is crucial to design and operate biomass supply chains that are efficient. In previous studies, simulation modelling was used to analyse biomass supply chains while incorporating its complexities and dynamic nature. Despite the impact of biomass storage on demand fulfilment and logistics cost, the problem of biomass inventory management is overlooked. In this paper, a simulation model is developed to compare demand fulfilment, cost, and emission of a forest-based biomass supply chain for two inventory systems: 1) order-up-to-level, and 2) fixed order quantity. Unlike the previous simulation studies, the considered supply chain includes multiple number of conversion facilities that use different types of biomass. Additionally, competition for biomass and logistical resources as well as substitution of biomass, when possible, are considered in the model. The simulation model is applied to a case study in Canada to assess different scenarios. The fixed order quantity system often results in higher demand fulfilment, however, it has higher cost and CO2 eq. emission compared with the order-up-to-level system. In both inventory systems, the transportation cost has the highest contribution to the total cost, ranging from 50% to 82% depending on the type of conversion facility. The grinding operation contributes the most (56%–81%) to the total CO2 eq. emission for both inventory systems.