Functional-unit-based life cycle optimization for design of sustainable product systems with application on biofuel supply chains

We propose a life cycle optimization framework for sustainable design of hydrocarbon supply chains considering economic and environmental criteria that are based on the concept of "functional unit". With the functional-unit-based objective functions, we develop a biofuel supply chain system that is both cost-effective and environmentally sustainable. The ε-constraint method is applied for multi-objective optimization and a series of Pareto-optimal solutions are obtained which reveal the tradeoff between economic and environmental performances. Due to the introduction of functional-unit- based objectives, the resulting model is formulated as a mixed integer linear fractional program (MILFP), which can be challenging for global optimization. Therefore, we further introduce two tailored MILFP methods, namely parametric algorithm and reformulation-linearization method for the efficient solution. The model and solution methods are illustrated by the spatially explicit optimization of a potential county-level hydrocarbon biofuel supply chain in the state of Illinois.