Design for flexibility in the forest biorefinery supply chain

The objective of this thesis is to develop a design methodology for targeting the required level of flexibility, designing the supply chain (SC) network configuration, and evaluating different FBR strategies for transforming a forest company. The methodology is demonstrated using a case study that involves two product/process options, including thermochemical and biochemical processes, with several implementation strategies, implemented over the years.;The pivot of this methodology is the margins-based thinking used as an operating policy. It is discussed that, instead of applying the traditional manufacturing-centric approach in production which focuses on capacity management and tries to minimize the costs, the margins-based policy must be implemented, which has the following specifications: • It maximizes the profit instead of minimizing costs. • It considers all costs incurred by SC activities in an integrated manner and doesn't only focus on production cost. • It exploits the potential for flexibility in the SC, especially in production, to maximize profit.;A SC optimization formulation is developed to represent such thinking. Using this formulation, a design methodology is proposed for making strategic decisions related to biorefinery SC design. This methodology is fed by separate methodologies which identify the most promising set of product to produce and technologies to employ. Given that, the methodology involves four major steps: • Defining process alternatives representing different potentials for flexibility. • Defining SC network alternatives based on the defined process alternatives as well as the policies, advantages and restrictions of the company. • Targeting the level of flexibility of processes and determining its associated SC network. • Analyzing different implementation strategies for the proposed product/processes with their targeted level of flexibility and defined SC network.;A set of performance metrics that represents SC profitability, robustness and flexibility is used to evaluate the performance of biorefinery strategies for several market scenarios.;The results show that when the flexibility of a system is enhanced, its profit increases. But this does not necessarily end in profitability improvement. For the profitability of a flexible system to improve, the extra capital cost paid for increasing the level of flexibility must be compensated by the profit improvement. Thus, for some cases profitability increases with flexibility and for some cases it does not. Moreover, robustness has a direct relationship with flexibility. As flexibility increases, the system becomes more robust against market volatility.;The results reveal the importance of SC analysis in making design decisions. They illustrate that changes in the level of flexibility will directly affect the company's opportunities and strategies in the market, and thus, each level of flexibility implies a specific SC network configuration and management strategy. Therefore, there must be integration between process design and SC network design.;It is also shown that added-value chemicals are promising for the long-term success of biorefineries. Their profitability, in terms of internal rate of return (IRR), is considerably higher than that of commodities. (Abstract shortened by UMI.)...