INCORPORATING FLEXIBILITY DESIGN INTO SUPPLY CHAIN DESIGN FOR FOREST BIOREFINERY
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For a forestry company to improve its business model, it should on the one hand diversify its revenue and on the other hand change its current manufacturing culture, which focuses on capacity management and neglects supply-chain (SC) profitability. This culture will be changed by applying novel SC operating policies which help to maximize SC profit by exploiting production flexibility. The level of flexibility should lead to maximum SC profit and must have an acceptable return on investment. The desired level of flexibility must be targeted at the design stage. Because the ultimate goal is to maximize SC profit, SC profitability must play a key role in targeting the level of flexibility. The goal of this paper is to show how an SC-based analysis can be used for targeting the level of flexibility in biorefinery processes. For a finite number of design alternatives with different potentials for flexibility, the SC-based analysis targets the operating window of each design alternative and evaluates its performance under different market conditions based on the impacts of the design of each alternative on operational activities.