Designing a biodiesel supply chain in Mexico City

Abstract

Mexico City is a prime location to start a biodiesel enterprise due to its sizeable availability of waste vegetable oil (WVO) and biodiesel users. WVO is an extremely viable feedstock for producing biodiesel because of the similar functional properties compared to other feedstocks and low cost; collecting it for local reuse has enormous environmental savings potential. Supply chain design is essential for the success for this startup biodiesel enterprise. The purpose of this thesis is to analyze a biodiesel enterprises value chain that uses feedstock as the primary performance area within the value chain. Second, this thesis will focus on optimizing the feedstock supply chain through a vehicle routing problem with time constraints in order to maximize the cost performance of the business. TransCAD transportation planning software was used to solve the vehicle routing problem through different scenarios that included 263 WVO stops positioned randomly and clustered. The results reveal a logistics design model with optimized transportation cost providing insight into operating a successful start up biodiesel enterprise. Potential takeaways of these findings show that clustering is a necessary technique for optimizing transportation cost through managing vehicle fleet size, manpower, and vehicle scheduling.