This research presents an optimization model specifically designed to enhance the efficiency of operations within the Hydrotreated Vegetable Oil (HVO) supply chain. The key participants in this supply chain encompass suppliers of Refined, Bleached, Deodorized Palm Oil (RBDPO), raw material storage facilities, HVO production facilities (biorefineries), HVO product storage, and end users. The model incorporates decision variables related to inventory management, feedstock and product delivery, and production processes. The results of the tests reveal a global optimum value of $55,982.30, which consists of various cost components: the raw material purchase cost and total handling cost (Z1), totaling $12,754.94; total inventory storage cost (Z2) of $928.60; total production cost (Z3) of $35,605.56; and total transportation cost between processing facilities (Z4) of $4,643.21. The process of identifying the optimal solution necessitated 476 iterations. The model was validated utilizing optimization software to derive the best solution, thereby assisting strategic decision-making for sustainable and economic biofuel supply chain management. The application of this optimization model allows companies to minimize production costs, mitigate environmental impacts, and enhance the overall sustainability of the HVO supply chain. The findings suggest that this optimization approach can effectively reduce total supply chain costs and improve operational efficiency.

Keywords: Hydrotreated Vegetable Oil (HVO), supply chain model, optimization.