Optimizing Palm Oil Biomass Supply Chain Logistics through Multi-Objective Location-Routing Model

Abstract

Malaysia can convert agricultural wastes (biomass) into biofuel to reduce fossil fuel dependency and solve the disposal problem. As one of the largest palm oil producers, Malaysia has an abundance of palm oil biomass, but the biomass has high humidity, low energy density, and is scattered geographically. Establishing collection facilities with pretreatment operations is suggested to collect the biomass and improve its quality. Nevertheless, the facility placement and vehicle routing decisions significantly affect the total cost and operational efficiency. Hence, this study develops a model to address the location-routing problem and quantifies the pretreatment operation to customize the process in the biomass supply chain. This research also addresses sustainability from all dimensions through multi-objective optimization. The model minimizes costs, reduces negative social impacts by considering population densities, and measures environmental performance through CO2 emissions. The study first optimized each objective function separately and then conducted a multi-objective optimization using a weighted sum approach. Optimizing each objective function individually will achieve the best outcome for each dimension, but enhancing one objective would impair the others. However, multi-objective optimization shows some compensation for the performances where economic, social, and environmental indicator values decreased by 0.36%, 6.58%, and 15.28%, respectively. The results demonstrate that the model adjusts the locational and routing decisions based on different goals.