Proceedings of the 2017 Industrial and Systems Engineering Conference K. Coperich, E. Cudney, H. Nembhard, eds. Simulation-based approach for the optimization of a biofuel supply chain Abstract ID: 2236 No Author 1 or 2 Yet No Organization Yet No Location Yet Abstract The billion-ton study lead by the Oak Ridge National Laboratory indicates that the U.S. can sustainably produce over a billion ton of biomass, annually. However, the delivery of the biomass required to meet the required goals is particularly challenging. This is mainly because of the physical properties of biomass. This paper focuses on the use of agricultural residues to produce second-generation biofuels. Second generation biomass exhibits more quality variability (e.g., higher ash and moisture contents) than first generation. The purpose of this study is to quantify the cost of imperfect feedstock quality in a biomass-to-biorefinery supply chain (SC) and to develop a discrete event simulation coupled with an optimization algorithm for designing a biofuel SC’s. This paper presents a novel optimization approach based on an extended Integrated Biomass Supply and Logistics (IBSAL) simulation model for estimating the collection, storage, and transportation costs. The presented extension of the IBSAL considers the cost incurred for having imperfect feedstock quality and finds the optimal SC design. The applicability of this methodology is illustrated by using a case study in Ontario, Canada. A converging set of non-dominated solutions is obtained from computational experiments. Sensitivity analysis is performed to evaluate the impact of different scenarios on overall costs. Preliminary results are presented. Keywords Logistics; Discrete-event Simulation; Simulation-based Optimization; Supply Chain; Renewable Energy; Biofuels. * Corresponding author. Tel.: + 210-458-8746 E-mail address: krystel.castillo@utsa.edu 1. Introduction The motivation for moving from fossil to renewable (clean) energy presents some challenges in terms of the high logistical cost and the ability of non-fossil based fuels to become cost competitive. Some of the reasons that motivate this effort are: environmental sustainability, energy security, and agricultural economics. Biomass is the largest single source of renewable energy (3.9 quadrillion out of the 9.6 quadrillion Btu in 2015) [1]. Additional to the production of biofuels, which have been recognized as an alternative source of renewable energy [2], biomass is used in partial replacement processes for the generation of electricity (e.g., co-firing wood pellets in coal plants), and for the production of biomaterials. The billion-ton study lead by the Oak Ridge National Laboratory indicates that the U.S. can sustainably produce over a billion ton of biomass annually without adversely affecting the environment [1]. However, the challenge derives greatly from the logistics (i.e., collecting, storing, and transporting the biomass to the biorefineries at a cost-effective delivered cost) imposed by the physical properties of biomass. Biomass is bulky, widely geographically dispersed, season and weather dependent and has low energy density. The U.S. government has established a series of goals in the Renewable Fuel Standards (RFS) mentioned in the 2007 Energy Independence and Security Act (EISA) [3] to support the effort of moving from fossil to renewable energy. The goals of RFS (2) are to produce 9 billion gallons of renewable fuel by 2008, and 36 billion by 2022 (no more than 15 billion from corn-starch and a minimum of 16 billion gallons from cellulosic biofuels [4]). Particularly, the RFS requirements for cellulosic biofuel are 230 million gallons for 2016, and 312 (proposed) for 2017 (i.e., increase by 35% (82 million gallons) between 2016 and 2017) [5]. Also, the standard proposes to reduce 60% the lifecycle carbon emission from cellulosic biofuels [5].