Designing a reliable bio-fuel supply chain network considering link failure probabilities

• Presents a pre-disaster planning model to strengthen the links between the multi-modal facilities.
• Failure probability of links between the multi-modal facilities is estimated using a spatial static model, which developed from real world data.
• Conduct a case study of biofuel supply chain with data from Mississippi and Alabama.
• The model saves $0.27/gallon when a disaster happens.

This study presents a pre-disaster planning model that seeks to strengthen a bio-fuel supply chain system’s multi-modal facility links while accounting for limited budget availability. The model presented here determines which set of facilities and links to select that will maximize post-disaster connectivity and minimize bio-fuel supply chain related costs. The failure probability of the links between the multi-modal facilities is estimated using a spatial statistic model, which is developed from real world data. This paper develops a generalized Benders decomposition algorithm to solve this challenging NPNP-hard problem. The proposed algorithm is validated via a real-world case study with data from Mississippi and Alabama. Computational results show that the proposed solution approach is capable of solving the problem efficiently. Several experiments are conducted to demonstrate the applicability of this model by testing various model parameters on bio-fuel supply chain network performance, including reliability improvement cost, availability of budget, biomass supply changes, and the risk averseness degree for decision makers. Numerical analysis indicates that, under normal conditions, the minimum cost model determines a unit bio-fuel delivery cost of $3.56/gallon. However, in case of a disaster, the unit bio-fuel delivery cost provided by the minimum cost model increases to $3.96/gallon, compared to $3.69/gallon provided by the reliable model solution.