A supply network optimisation with functional clustering of industrial resources

Abstract This paper presents a functional clustering approach integrated in an industrial resources optimisation. Industrial processing hub formation through functional clustering of involved facilities is presented. A palm biomass case study is developed in this paper to illustrate the functional clustering model. Production facilities are identified and processing hub allocation is determined in the case study. Two models are developed: (i) biomass supply network optimisation and synthesis and (ii) biomass supply network with functional clustering. The former acts as a base case for optimal supply network synthesis. The following reforms the former by integrating a functional clustering concept. The second model functionally clusters the industrial facilities based on their material interactions. Each cluster formed consists of a centralised processing hub, which acts as the backbone/seed of a functional cluster. Strategic locations of centralised processing hubs are determined and functional clusters are formed by optimisation modelling. Optimised biomass supply networks are developed from the optimisation activities. The optimisation result favours centralised processing hub formation. Lowered machinery capital investment and transportation cost are achieved in the functional clustered model.

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