The coordination of biofuel supply chain members considering farmers' technology level and agricultural support services company

Document Type : Article

Authors

School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran.

Abstract

Due to the significant growth in the world population in the last decade, there have been many challenges, including an increasing demand for energy and fossil fuels and rising oil prices. According to the mentioned problems, renewable energy would be more cost-effective, efficient, less polluting, and more sustainable. Among renewable energies, bioenergy is the third largest renewable source of electricity and the most significant renewable heat source, having more than 95% of the supply. In recent years, due to increased fossil fuel consumption and greenhouse gas emissions, the use of renewable energy, including biological energy, has been of significant importance. Therefore, the bioenergy supply chain is one of the most important and challenging issues due to its environmental impact. Moreover, coordination models among members to reduce costs and increase chain profit are inevitable in the bioenergy supply chain. Therefore, this research has a three-level bioenergy supply chain, consisting of two competing farmers ‘A’ and ‘B’, an Agricultural Support Services Company (ASSC) and a biorefinery. Considering the importance of technology in different stages of the agricultural process, farmer sales, besides the price, farmers decide on the technology level used in biomass agriculture. The company and biorefinery decide on the basic order quantity and biofuel price respectively. In order to analyze the model, the results obtained from the non-cooperation mode were compared with the cooperation mode, in which three separate infrastructure cost-sharing, operational cost-sharing, and revenue-sharing contracts are used. The results indicate that cooperation with the agricultural company leads to an increase in the technology level and profit of farmer A. While the biomass price of farmer ‘B’ decreased, accepting part of the operational costs by the company increases the farmer's final profit. In addition, sharing the refinery's income with the company leads to an increase in the price of biofuel. Therefore, this research shows that using collaboration contracts between members of this supply chain and also the intervention of the agricultural company in upgrading the technology level can be effective in improving the members' profit and technology level.

Keywords

Main Subjects

References

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Sharif Journal of Industrial Engineering & Management
Volume 40, Issue 2
March 2025
Pages 30-56

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