Alex Abakash Abhilash Arunangshu Venkatesh Vishal Bio Ethanol

Abakash Saikia 1011001

Abhilash Katiyar 1011003

Arunangshu Giri 1011013

G Venkatesh 1011026

Vishal D 1011074

The Philippines’ Rising Bioethanol Industry

Introduction• Philippines’ is an archipelago of more than

7,100 islands located in South-East Asia• The Biofuel Law mandated– 5% bioethanol with gasoline within 4 years– 1% biodiesel with diesel fuel within 4 years– 10% for gasoline– 2% for diesel by 2011

• Philippines required about 500 million liters of ethanol annually for the production

• Country needed at least 25 plants ethanol plants, each with annual output of 20 million liters

Overview• Variables Included

– Total Quantity of Ethanol produced in each region– Total Quantity of Ethanol demand in each region– Quantity of ethanol produced using different feedstock in each region– Transportation of ethanol from each region to the other

• Objective– Minimize total cost

• Constraints– Demand constraints for 2011– Feedstock constraints– Capacity constraints – for each feedstock variety– Maximum of 30 distilleries

Q 1: Cost to produce bioethanol insane Carlos Bioenergy Inc’s facility in Region VI, then ship it to Subic and transport it by lorry to Pandacan, Manila?

• Initial capital investment of building the facility $41.34 m• Production cost of bioethanol in the facility $0.46 • Shipping charges to Subic $0.02077275• The transportation by lorry to Pandacan, Manila $0.026845• Total charge per litre $0.5066

Q 2: How much on average it will cost to produce biodiesel from sugarcane in the Visayas and bring it to greater Manila area? How much does this estimate differ from your answer to question 1?• Initial capital investment of building the facility $41.34 m• Production cost of bioethanol in the facility $0.46 • Shipping charges to Cebu $0.027697• The transportation by lorry charge $0.026845 • Total charge per litre $0.5145

Q 3: What are the possible constraints in this problem?

• Distillery to be located relative to production areas and oil depots• Adequacy of water (maybe near river)• Adequacy of electricity (for pumps and motors need)• Logistics like road infrastructure, port and handling facility,

appropriate transport and storage• Proximity to farm production of raw materials (sugarcane,

molasses, cassava, corn etc) to reduce incoming logistics cost.• Availability of nearby port for transshipment• Need to use Subic to transport to Manila, which is 40% of the

market• Facilities max limit of 20m liters per year for the largest distillery

Q 4: Cost of processing sugarcane, corn, sweet sorghum stalk and sweet sorghum grain into bioethanol in different producing regions and transporting it to different utilizing regions?

Feedstock price/litre

Feedstock Avg Production cost Min Max Avg Total cost/litre ($)

Sugarcane 0.532 0.295 0.325 0.31 0.842

Molasses 0.532

Cassava 0.642 0.172 0.666 0.419 1.061

Corn 0.65 0.439 0.517 0.478 1.128

Sweet Sorghum Stalk 0.437 0.227 0.248 0.2375 0.6745

Sweet Sorghum Grain 0.437 0.331 0.386 0.3585 0.7955

Cost of producing bioethanol


Avg Shipping Cost Average Lorry Cost Avg Total Cost/Litre

GMA-NLC 0 0.026845 0.026845

GMA-SLC 0 0.026845 0.026845

GMA-VC 0.030857 0.026845 0.057702

GMA-MC 0.044400167 0.026845 0.071245167


Total Cost/Litre ($) NLC GMA SLC VC MC

NLC 0.026845 0.026845 0.026845 0.057702 0.071245

GMA 0.026845 0.026845 0.026845 0.030857 0.0444

SLC 0.026845 0.026845 0.026845 0.057702 0.071245

VC 0.057702 0.030857 0.057702 0.026845 0.040388

MC 0.071245167 0.044400167 0.071245 0.040388 0.026845

Q 5: Constraints and objective? Formulation? Solution?

Minimize.026845NLC_NLC+.026845NLC_GMA+.026845NLC_SLC+.057702NLC_VC+.071245N

LC_MC+.026845GMA_NLC+.026845GMA_GMA+.026845GMA_SLC+.030857GMA_VC+.044

400GMA_MC+.026845SLC_NLC+.026845SLC_GMA+.026845SLC_SLC+.057702SLC_VC+.071245SL

C_MC+.057702VC_NLC+.030857VC_GMA+.057702VC_SLC+.026845VC_VC+.040388VC_M

C+.071245MC_NLC+.044400MC_GMA+.071245MC_SLC+.040388MC_VC+.026845M

C_MC+ 16.84Nsugar+21.22Ncassava+22.56Ncorn+13.49NStalk+15.91NGrain+ 16.84Gsugar +21.22Gcassava+22.56Gcorn+13.49GStalk+15.91GGrain+ 16.84Ssugar+21.22Scassava+22.56Scorn+13.49SStalk+15.91SGrain+ 16.84Vsugar+21.22Vcassava+22.56Vcorn+13.49VStalk+15.91VGrain+16.84Msugar+21.22Mcassava+22.56Mcorn+13.49MStalk+15.91MGrain


St!Demand constraints for 201120NLCp - NLC_GMA - NLC_SLC - NLC_VC - NLC_MC + GMA_NLC+ SLC_NLC+ VC_NLC+

MC_NLC>=106.9220GMAp - GMA_NLC - GMA_SLC - GMA_VC - GMA_MC+ NLC_GMA+ SLC_GMA+

VC_GMA+ MC_GMA>=237.620SLCp - SLC_GMA - SLC_NLC - SLC_VC - SLC_MC+ GMA_SLC+ NLC_SLC+ VC_SLC+

MC_SLC>=71.2820VCp - VC_GMA - VC_NLC - VC_SLC - VC_MC + GMA_VC+ NLC_VC+ SLC_VC+

MC_VC>=106.9220MCp - MC_GMA - MC_NLC - MC_SLC - MC_VC+ GMA_MC+ NLC_MC+ SLC_MC+

VC_MC>=71.28!Feedstock constraintsNsugar+Ncassava+Ncorn+NStalk+NGrain-NLCp=0Gsugar +Gcassava+Gcorn+GStalk+GGrain- GMAp =0Ssugar+Scassava+Scorn+SStalk+SGrain-SLCp =0Vsugar+Vcassava+Vcorn+VStalk+VGrain-VCp=0Msugar+Mcassava+Mcorn+MStalk+MGrain-MCp=0

Q 5: Constraints and objective? Formulation? Solution?!Capacity contraints - Corn20Ncorn<=552.994820Gcorn<=25.640820Scorn<=84.910420Vcorn<=180.270820Mcorn<=1257.4472!Capacity contraints - Sugarcane20Nsugar<=101.6523220Gsugar<=123.5927720Ssugar<=19.8845520Vsugar<=1095.6204720Msugar<=263.48714!Capacity contraints - Cassava20Ncassava<=10.220Gcassava<=12.8720Scassava<=23.620Vcassava<=35.1520Mcassava<=220.14!Capacity contraints - Sweet Sorghum Stalk. Since Sweet sorghum is just being introduced, we don’t expect more than

60,000 metric tonnes to be produced by each region both varieties. Therefore we set: 60,000*50 litres per ton = 3 million

20NStalk<=320GStalk<=320SStalk<=320VStalk<=320MStalk<=3


!Capacity contraints - Sweet Sorghum Grain. 60,000*375 litres per ton = 22.5 million

20NGrain<=22.520GGrain<=22.520SGrain<=22.520VGrain<=22.520MGrain<=22.5!Maximum of 30 distilleriesNsugar+Ncassava+Ncorn+NStalk+NGrain+Gsugar+Gcassav

a+Gcorn+GStalk+GGrain+Ssugar+Scassava+Scorn+SStalk+SGrain+Vsugar+Vcassava+Vcorn+VStalk+VGrain+Msugar+Mcassava+Mcorn+MStalk+MGrain<=30

Q 5: Constraints and objective? Formulation? Solution?OBJECTIVE FUNCTION VALUE 1) 506.1538 VARIABLE VALUE REDUCED COSTNSUGAR 5.000000 15.952001 GSUGAR 6.000000 15.952001VSUGAR 11.000000 16.569139 MSUGAR 3.000000 16.840000 NGRAIN 1.000000 15.022000 GGRAIN 1.000000 15.022000 SGRAIN 1.000000 14.485100 VGRAIN 1.000000 15.639140 MGRAIN 1.000000 15.910000NLC_SLC 13.080000 0.000000GMA_SLC 38.200001 0.000000 VC_GMA 133.080002 0.000000MC_GMA 2.720000 0.000000NLCP 6.000000 0.000000GMAP 7.000000 0.000000 SLCP 1.000000 0.000000 VCP 12.000000 0.000000 MCP 4.000000 0.000000

NO. ITERATIONS= 31991


• Need to spend around $506 million for 2011 apart from $40 million setup cost for each of the 30 distilleries – 6 distilleries in Northern Luzon Cluster (5 sugarcane feed, 1 sorghum

grain feed).– 7 distilleries in Greater Manila Region (6 sugarcane, 1 sorghum

grain)– 1 sorghum grain distillery in Southern Luzon Cluster– 12 distilleries in Visayas (11 sugarcane, 1 sorghum grain)– 4 distilleries in Mindanao (3 sugarcane, 1 sorghum grain)

• Transportation between the flowing regions needs to take place: – 13.08 million liters between NLC and SLC– 38.2 mil between GMA and SLC– 133 mil between VC and GMA– 2.72 between MC and GMA

Q 6: What will be the effect of the changes in the price of raw sugar on the solution?

• Raw sugar price will affect the availability of sugarcane for producing bioethanol. The excess sugar productions currently in the different clusters are as shown below:NLC 1.652321 GMA 3.592773 SLC 19.884550 VC 875.620483 MC 203.487152

• If the availability of sugar reduces by more than the amount mentioned about, it increases the costs by forcing us to use other feedstock.

Q 7: Sensitivity analysis report of your model.

• From dual prices, – demand constraints – feedstock constraints contribute to our overall cost as

expected. – The other constraints hardly make a difference at this point

because of surplus/slack.

Thank You

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Alex Abakash Abhilash Arunangshu Venkatesh Vishal Bio Ethanol