Spatio-Temporal Economic Properties of Supply Chains

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    Conference Presentation
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    AIChE Member Credits 0.5
    AIChE Members $19.00
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    AIChE Undergraduate Student Members Free
    Non-Members $29.00
  • Conference Type:
    AIChE Annual Meeting
  • Presentation Date:
    November 11, 2021
  • Duration:
    19 minutes
  • Skill Level:
    Intermediate
  • PDHs:
    0.50

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Modern supply chains (SCs) are complex, integrating information and material resources over large distances and periods of time, and importantly, with multiple stakeholders [1,2]. Globalization and sustainability provide continuing pressure to integrate complexity into SCs [3,4]. An interesting problem emerging as a part of this complexity is ensuring that independent SC stakeholders are treated independently in SC optimization frameworks with respect to their profit-seeking natures [5]. Coordination can be implemented as a SC management strategy, treating a SC as a market consisting of independent stakeholders [6]. In this framework stakeholders interact with the SC management system by submitting bidding information to an independent system operator (ISO) who resolves the bids and sets market prices. This SC optimization approach offers theoretical guarantees related to economics and profit distribution to stakeholders [7]. Importantly, within the coordination framework, the values of products are quantified and priced as a part of the solution, revealing the inherent values of SC material streams that might otherwise be written off as waste [8].

In this session, we present a spatiotemporal coordination framework for multiproduct SCs. We demonstrate how transportation captures spatial price variations within the framework and identify storage as the underlying phenomenon behind temporal price variation. In this unified spatiotemporal framework we capture the dynamics of time-varying SC problems, including the evolution of prices subject to complex interactions between product supply, demand, processing, transport, and storage. We derive pricing relationships from these phenomena and show that these relationships are embedded in the optimization model dual program.

We apply our framework to an existing problem based on the Wisconsin dairy industry [9]; this is worth 43.4 billion USD annually [10], producing about 14.5 metric tonnes of milk each year [11]. While this industry aims to grow, managing the livestock waste (manure) associated with 1.26 million dairy cattle is a significant challenge, especially due to concerns over nutrient accumulation (particularly phosphorus) in soils and water bodies [12,13]. Part of the problem involves creating incentives for farmers to process manure and to ultimately export the phosphorus out the state, i.e., as a fertilizer for phosphorus-deficient croplands elsewhere. We present a case study where coupling manure digestion to the state electricity grid (via electricity generation from biogas) at an hourly time scale identifies a window of opportunity during daily electrical demand peaks sufficient to drive manure processing based on the value of electricity alone. Coordinating the dairy waste supply chain in parallel with the state electricity grid creates value for farmers, for electricity consumers (by way of lower prices) and may provide the necessary value to unlock an organic fertilizer industry in Wisconsin.

References
[1] Ana Paula Barbosa-Póvoa and José Mauricio Pinto. Challenges and Perspectives of Process Systems Engineering in Supply Chain Management. Comput Aided Chem Eng, 44: 87 – 96; 2018. https://doi.org/10.1016/B978-0-444-64241-7.50009-4.
[2] Lisia S. Dias and Marianthi G. Ierapetritou. From process control to supply chain management: An overview of integrated decision making strategies. Comput Chem Eng, 106: 826 – 835; 2017. https://doi.org/10.1016/j.compchemeng.2017.02.006.
[3] Ana Paula Barbosa-Póvoa. Process supply chains management – where are we? where to go next? Front Energy Res, 2:23; 2014. https://doi.org/10.3389/fenrg.2014.00023.
[4] Lazaros G. Papageorgiou. Supply chain optimisation for the process industries: Advances and opportunities. Comput Chem Eng, 33(12):1931 – 1938; 2009. FOCAPO 2008 – Selected Papers from the Fifth International Conference on Foundations of Computer-Aided Process Operations. https://doi.org/10.1016/j.compchemeng.2009.06.014.
[5] Apoorva M. Sampat and Victor M. Zavala. Fairness measures for decision-making and conflict resolution. Optim Eng, 20: 1249 – 1272; 2019. https://doi.org/10.1007/s11081-019-09452-3.
[6] Apoorva Sampat, Yicheng Hu, Mahmoud Sharara, Horacio Aguirre-Villegas, Gerardo Ruiz-Mercado, Rebecca A. Larson, and Victor M. Zavala. Coordinated management of organic waste and derived products. Comput Chem Eng, 128:352 – 363; 2019. https://doi.org/10.1016/j.compchemeng.2019.06.008.
[7] Philip A. Tominac and Victor M. Zavala. Economic properties of multi-product supply chains. Comput Chem Eng, 145: 2021. https://doi.org/10.1016/j.compchemeng.2020.107157.
[8] Philip Tominac, Horacio Aguirre-Villegas, Joseph Sanford, Rebecca Larson, and Victor Zavala. Evaluating landfill diversion strategies for municipal organic waste management using environmental and economic factors. ACS Sus Chem Eng, 9(1): 489 – 498; 2021. https://doi.org/10.1021/acssuschemeng.0c07784.
[9] Yicheng Hu, Matthew Scarborough, Horacio Aguirre-Villegas, Rebecca Larson, Daniel Noguera, Victor Zavala. A supply chain framework for the analysis of the recovery of biogas and fatty acids from organic waste. ACS Sus Chem Eng, 6(5): 6211 – 6222; 2018. https://doi.org/10.1021/acssuschemeng.7b04932.
[10] Dairy development. Department of Agriculture, Trade and Consumer Protection. State of Wisconsin. Available: https://datcp.wi.gov/Pages/Growing_WI/DairyDevelopment.aspx. Accessed: 03-15-21.
[11] Farm & Dairy Statistics. Dairy Farmers of Wisconsin. 2021. Available: https://www.wisconsincheese.com/media/facts-stats/farm-dairy-statistics. Accessed: 03-15-21.
[12] Apoorva Sampat, Gerardo Ruiz-Mercado, Victor Zavala. Economic and environmental analysis for advancing sustainable management of livestock waste: A Wisconsin case study. ACS Sus Chem Eng, 6(5): 6018 – 6031; 2018. https://doi.org/10.1021/acssuschemeng.7b04657.
[13] Apoorva Sampat, Edgar Martin-Hernandez, Mariano Martin, Victor Zavala. Tecchnologies and logistics for phosphorus recovery from livestock waste. Clean Technol Environ Policy, 20: 1563 – 1579; 2018. https://doi.org/10.1007/s10098-018-1546-y.

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AIChE Member Credits 0.5
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