A fairness-guided supply chain framework for polyester production from biomass

Abstract

Supply chains are complex systems involving many assets and stakeholders that need to be carefully orchestrated to conduct a variety of functions (e.g., meeting demands, ensuring robust operations, and cut down costs). Traditional optimization models that maximize total profit often lead to unfair profit distribution among stakeholders, which could discourage stakeholder collaboration and impede sustainable business development (e.g., activate new market/economies). In this work, we propose a fairness-guided optimization framework for supply chain design. To motivate our developments, we consider the production of a valuable polyester known as polybutylene adipate terephthalate (PBAT) from biomass in the State of Wisconsin. Specifically, we aim to design a supply chain (a bioeconomy) that harnesses biomass from different counties (stakeholders) and that processes this in chemical facilities to produce PBAT. We study the total cost and greenhouse gas (GHG) emissions in the system with the optimal allocation of supplies and facilities installed. We introduce different optimization formulations that maximize the total profit and that maximize a fairness measure of the profit distribution. Our results demonstrate that the fairness-driven formulation can achieve a more equitable distribution of profit but at the expense of a lower total profit, highlighting the inherent trade-off between fairness and economic efficiency. This study aims to provide insights for decision-makers that aim to balance economy development, sustainability, and fairness when designing supply chains.