Using an inventory control model to establish biomass harvesting policies

The financial performance of a biomass-dependent production system was evaluated using an inventory control model. Dynamic programming was employed to examine the constraints and capabilities of producing ethanol from various biomass crops. In particular, the model evaluated the plantation, harvest, and manufacturing components of a woody biomass supply system. Using inventory control to establish biomass harvesting policies is one way of achieving a cost efficient operation. The optimum wood to ethanol production scheme could produce 38 million litres of ethanol in any given harvest year, a 13.6 million litres increase over the least optimal policy. Delivered cost was $0.38 per litre, consistent with the unit costs from other studies. Nearly 60% of the cost was from the manufacturing component of the system. The remaining costs were attributed to growing biomass (14%), harvest and shipment of the crop (18%), storage of the raw material and finished product (7%), and ‘lost sales’ (2%). Inventory control, in all phases of production, could influence total delivered costs of ethanol by as much as 62%. A comparison between the least costly wood system and alternative systems further illustrated the benefits of inventory control.