Bio-diesel production using mobile processing units: A case in Indonesia

Bio-diesel is a sustainable alternative to fossil fuel, in particular if the input materials are not edible. This paper considers the production of bio-diesel from rubber seeds, which are currently viewed as a waste product and discarded by farmers. We investigate whether technological innovations in local pre-processing at individual farms and oil production via mobile processing units (MPUs) visiting villages, makes bio-diesel production profitable for groups of farmers. A mixed integer programming model optimizing supply chain decisions is developed and applied to a specific case in Indonesia. We find that operating the relatively expensive MPUs at maximum capacity is essential for economic sustainability. Furthermore, variations in the price of bio-diesel affect the profitability and governments may consider offering minimum price guarantees.