Optimal Design for Biodiesel Supply Chain: Case Study

  • Fitriani Tupa R Silalahi Bandung Institute of Technology, School of Business and Management, Bandung, Indonesia; Del Institute of Technology, Faculty of Engineering Management, Laguboti, Indonesia;
  • Togar M. Simatupang Bandung Institute of Technology, School of Business and Management, Bandung, Indonesia
  • Manahan Siallagan Bandung Institute of Technology, School of Business and Management, Bandung, Indonesia
Keywords: Biodiesel, Palm oil, Optimization, Supply chain, Indonesia, Delivery point, Facility location


One renewable energy form currently being promoted is that of biodiesel as a substitute for diesel fuel. This involves mixing biodiesel with petrodiesel in proportions governed by the respective regulations of each country. The purposes of this research are to support the exploiting of biodiesel forms of renewable energy and to optimize the palm oil-sourced biodiesel supply chain by conducting an Indonesia-based case study. The optimization process was implemented in accordance with the government's mandate and long-term planning. There are two decision variables to consider. First, the model will identify the optimum delivery point locations as a blending terminal between biodiesel and petrodiesel (petroleum diesel). Second, it will determine the location of biodiesel plants’ construction in order to satisfy the government's mandate. The results show that, while determining delivery point locations affects supply chain costs, it does not do so significantly. More influential is determining the construction locations of biodiesel plants and this study provides a model for deciding the delivery points and locations of biodiesel plants in order to minimize biodiesel supply chain costs in Indonesia. This study presents in detail biodiesel supply chain process in Indonesia and based on the literature, no research was found on studying optimization biodiesel supply chain in Indonesia.



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Author Biographies

Fitriani Tupa R Silalahi, Bandung Institute of Technology, School of Business and Management, Bandung, Indonesia; Del Institute of Technology, Faculty of Engineering Management, Laguboti, Indonesia;

Fitriani Tupa R. Silalahi is a PhD candidate within the Doctoral Science in Management Program at the School of Business and Management, Bandung Institute of Technology, Indonesia. Her research focuses on optimization, modeling, and simulation. Her latest research is on biodiesel policy and biodiesel supply chain optimization from palm oil in Indonesia.

Togar M. Simatupang, Bandung Institute of Technology, School of Business and Management, Bandung, Indonesia

Togar M. Simatupang is a Professor of Operations and Supply Chain Management at Bandung Institute of Technology, Indonesia. He holds a PhD degree from Massey University in New Zealand. He is well known as an expert in supply chain management and creative industry development. His other research focuses on developing and managing collaborative relationships, such as how to design and manage supply chain collaboration, how to equalize their risks and rewards, and how to share the benefits of collaboration.

Manahan Siallagan, Bandung Institute of Technology, School of Business and Management, Bandung, Indonesia

Manahan Siallagan is an assistant professor of decision making and strategic negotiation interest group in Bandung Institute of Technology. He holds a Doctoral degree in Computational Intelligence and System Science from Tokyo Institute of Technology, Japan. Currently he is Director of Big Data Analysis and Social Simulation Laboratory at the School of Business and Management. His research focuses on decision making, simulation, and modeling.


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