Optimizing transportation and storage of final products in the sugar and ethanol industry: a case study

Abstract

AbstractCOPERSUCAR Ltda (the acronym for the Sugarcane and Ethanol Producers' Cooperative in São Paulo state) is a Brazilian cooperative of sugarcane producers and the largest sugar and ethanol manufacturer in Brazil, producing 4.4 million metric tons of sugar and 2.7 billion liters of ethanol. The cooperative is composed of 34 sugar mills with centralized sales and marketing. This organization establishes the amount of each product that will be manufactured in each mill to reduce total transportation and storage costs and, consequently, increase overall gain. Critical aspects of this problem are seasonal production and, therefore, the need to store final products to meet demand during the off‐season period. This study focuses on the application of a multi‐period linear programming model that provides optimal assignment of production, transportation, and storage of final products subject to manufacturing and flow capacity constraints. The expected annual benefits of implementing the proposed solution are 3.3 million dollars. In addition, a sensitivity analysis was carried out to investigate the possibility of increasing the capacity of the installed mills.