A location-inventory-routing optimization model for cost effective design of microalgae biofuel distribution system: A case study in Iran

This paper presents a Location-Inventory-Routing Problem (LIRP) optimization model for designing an algae fuel production and distribution network consisting of biomass production facility, distribution facilities, and extraction sites. The proposed model minimizes the total cost of the network including the cost of locating the distribution facilities and transportation and the expected inventory costs including holding, shortage, ordering and purchase. The proposed model helps decision-maker determine the optimal location and order policy of algae fuel distribution facilities, allocation of extraction sites to these facilities, and the routing decisions. The proposed model falls within the category of NP-hard problems and is solved with the modified versions of three algorithms; namely Simulated Annealing (SA), Genetic Algorithm (GA) and Firefly Algorithm (FA), and the performance of these methods are measured by test problems in different sizes. The results show that SA outperforms both GA and FA, and GA outperforms FA in terms of the quality of the solutions. Finally, the proposed model is validated and evaluated by a case study of algae fuel distribution network in Iran and the results are discussed.