USING AN INVENTORY CONTROL MODEL TO ESTABLISH BIOMASS HARVESTING POLICIES

The financial performance of a biomass-dependent production system was evaluated using an inventory control model. Dynamic programming was e mployed to examine the constraints and capabilities of producing ethan ol from various biomass crops. In particular, the model evaluated the plantation, harvest, and manufacturing components of a woody biomass s upply system. Using inventory control to establish biomass harvesting policies is one way of achieving a cost efficient operation. The optim um wood to ethanol production scheme could produce 38 million I of eth anol in any given harvest year, a 13.6 million 1 increase over the lea st optimal policy. Delivered cost was $0.38 l(-1) consistent with the unit costs from other studies. Nearly 60% of the cost was from the man ufacturing component of the system. The remaining costs were attribute d to growing biomass ( 14%), harvest and shipment of the crop ( 18%), storage of the raw material and finished product (7%), and ''lost sale s'' (2%). Inventory control, in all phases of production, could influe nce total delivered costs of ethanol by as much as 62%. A comparison b etween the least costly wood system and alternative systems further il lustrated the benefits of inventory control.