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Biomass and Bioenergy Vol. 15, No. 2, pp. 115124, 1998 # 1998 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0961-9534/98 $19.00 + 0.00 S0961-9534(98)00031-2

A FACTORIAL DESIGN ANALYSIS OF A BIOMASS TO ETHANOL PRODUCTION SYSTEM

STEPHEN C. GRADO*{ and M. JEYA CHANDRA6
*Mississippi State University, Department of Forestry, College of Forest Resources, Forest and Wildlife Research Center, Box 9681, Mississippi State, MS 39762-9681, U.S.A. and 6The Pennsylvania State University, Department of Industrial and Manufacturing Engineering, University Park, PA 16802, U.S.A. (Received 8 January 1998; accepted 18 February 1998) AbstractA least cost, dynamic programming solution was derived by an algorithm for ethanol production from woody biomass. Conversion of the feedstock was based on an enzymatic hydrolysis/fermentation process. The nal cost of ethanol from this system, prior to any sensitivity analysis, was $0.45 L1. A sensitivity analysis, using a factorial design, compared the relative impact of various model parameters on production costs. The factorial design analysis can be used as a guide for lowering nal product costs. Three factors were incorporated into the rst factorial design: the size of the manufacturing facility, storage retention, and the price of alternative feedstocks. Each of the main factors had an impact on the solution cost. Facility size had the largest eect, representing 45.3% of total cost variability. Storage deterioration and the price of alternative feedstocks had lower eects of 17.4% and 17.6%, respectively. The largest interaction eect, at 17.4%, illustrated that storage deterioration and facility size have a joint eect on production costs. The second factorial design employed ve factors. Ethanol yield from the woody feedstock accounted for 44.0% of the total variability in nal product cost. Harvesting equipment capability placed a 36.8% eect on the nal product cost. The third largest eect, at 8.7%, was plantation yield. Although plantation yields are of key importance to feedstock prices, they had a lesser impact than the other factors on the nal product cost over an entire production process. Storage retention and facility size had a reduced impact on total costs when considered in combination with other design factors. Based on this study the focus for research and technological improvements should be on conversion yields from wood, harvester equipment capabilities, and plantation yields. # 1998 Elsevier Science Ltd. All rights reserved KeywordsBiomass; wood conversion; harvesting; conversion facility size; wood deterioration; factorial design.

1. INTRODUCTION

The production process for end products using biomass feedstocks contains a number of unknowns in terms of technology and costs. The eects of harvesting technology and raw material conversion techniques on end product costs are examples. An approach is presented in the present paper to analyze the entire production system. The overall result should improve the production process by making it more ecient and cost competitive. Prior research resulted in an inventory control model for ethanol production from woody biomass feedstocks.1 The model evaluated the plantation, harvest, and manufacturing components of a woody biomass to ethanol supply system. A least cost solution was derived by a dynamic programming algorithm using inven{Author to whom correspondence should be addressed.

tory control. This solution also determined the optimum ordering or replenishment (e.g., harvest) and carrying (e.g., storage) policies for a given rotation length while minimizing the total cost of the overall supply system. Sensitivity analysis, with a factorial design, compared the relative inuence of various production factors on the cost of ethanol. The model evaluated the impact of biomass yields, harvesting losses, storage deterioration, manufacturing facility size, conversion yields, shortages, and market inuences on the production system. These parameters were chosen because they displayed a great degree of uncertainty or variability.2,3 For example, raw material deterioration, which depends on the species and form of the material ranges from 0.5 to 5.5% per month.4 Some studies have overlooked the impact of several of these factors on nal product costs. This sensitivity analysis was unique, because it provided a

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model that can be used in making decisions about system design and implementation. A review of previous studies helped establish average values and an acceptable range of variation for the parameters and costs under examination. This included such variables as biomass yields, harvesting capability, storage retention, manufacturing facility size, conversion yield, and multiple feedstocks.3,5 Unfertilized hybrid poplar plantations average 8 to 11 Mg ovendry (OD) wood ha1 y1, after mortality, when grown for four years.6,7 Based upon previous studies of short-rotation Populus plantations grown in central Pennsylvania the estimated yield for nonfertilized plantations was 33.5 Mg(OD) ha1 at the end of a four-year rotation.8 Unfertilized yields for lower density and longer rotation tree plantations were estimated from previous studies.6,7 The yield and cost parameters for a six-year rotation of low-density trees were selected as the most cost-eective system on the basis of previous cost comparison studies.2,5 Cullen and Barr,9 in a survey of potential woody biomass harvesting equipment, reported biomass recovery rates of 8090%. Sirois10 projected an eventual recovery rate of 85% after testing a mobile harvester on weed trees and residues; however, only a rate of 76% was achieved in the eld. In Canada, Schneider,11 using a number of small-scale harvest and chip production systems, found recovery rates of 5080% of the estimated available on-site woody biomass. The literature shows that harvester utilization rates are a function of the equipment in use. Equipment similar to or adapted from farm equipment is less ecient than prototype equipment developed for intensive culture harvesting. Thornqvist4 reported that the outdoor storage of wood chip fuel piles, approximately 55 m3 in size, had dry matter losses of 5.5% after four months. When storage increased from six to nine months, losses of 2.53.3% per month were noted. Gislerud12 showed indoor storage of chips had dry matter losses of 11.5% per month after three to ve months. The technical and cost structure of a wood ethanol manufacturing facility is dictated by the type of conversion process. Each conversion process is associated with a preferred feedstock type, a conversion rate, and certain nal products and by-products. Any assess-

ment of a processing facility also depends on scale-economics which inuence capital and operating costs. In general, large bioenergy conversion facilities will be cheaper to run, per output unit, than smaller ones.13 The classication of wood ethanol production capacities could be approximated from facilities using agricultural crops, since few commercial wood to ethanol plants exist. In Brazil, sugar cane to ethanol plants produce from 30,000 to 1,000,000 litres (L) day1 with 120,000 L day1 being more typical.14 Currently, 10005000 L day1 plants are under evaluation. However, it has been estimated that the most favorable operating level for Brazilian plants would be in the 2040 million L y1 range.13 In the U.S., corn to ethanol plants were categorized as small (under 10 million gal y1), medium (1030 million gal y1) and large (over 30 million gal y1).15 Previous studies on ethanol production have reported an approximately linear decrease in total production costs ranging from $1.03 L1, at 40,000 L y1 production, to $0.32 L1, at 1.4 million L y1 production.13 Although enzymatic hydrolysis/fermentation shows great potential,16 much of the earlier research on ethanol production was based upon acid-catalyzed hydrolysis systems.17 Bergeron et al.18 provided an economic review of several dilute acid hydrolysis/fermentation strategies. For plants having a 95 million L y1 capacity, the production cost of ethanol ranged from $0.46 to $0.59 L1 without byproduct credits. The cost of wood represented between 44 to 48% of the total production cost, based upon a delivered cost of $47 Mg1(OD). Hinman et al.19 saw the potential for a reduction in production costs to $0.33 L1 with improvements in xylose fermentation. Additionally, Hinman et al. found the cost of ethanol was most sensitive to conversion yield, ethanol concentration, and rate of xylose fermentation. Schuler and Nguyen20 developed a simulation model of several bioconversion strategies for ethanol production. A wood residue (500 Mg(OD) day1) to ethanol (50 million L y1) facility yielded a production cost of $0.63 L1. The feedstock and manufacturing costs represented 24% and 76% of the total, respectively. The purchase price of wood was $48 Mg1(OD) and the authors suggested that plantation wood could lower the cost of the feedstock. A smaller plant (100 Mg(OD) day1, 10 million L y1)

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increased costs to $0.75 L1. A single-parameter sensitivity analyses found the most important model variables to be plant size, conversion rates, wood cost and by-product credits.20 While most ethanol conversion systems have been based on a single feedstock there is some potential, and perhaps even greater necessity, to use several raw material inputs.3,16 Wayman et al.21 analyzed pine, aspen, and corn stover within a common fermentation process and achieved ethanol yields of 372, 346, and 388 L Mg1(OD) of feedstock, respectively. These yields reect an enzymatic saccharication of these feedstocks following prehydrolysis by SO2, and the application of a yeast to the fermentation process. These yields represented conversion eciencies of 29%, 27%, and 30%. Multiple raw material inputs would introduce cost competitive feedstocks to the manufacturing process and create safeguards against scarcities. As an illustration of this option, Lambert et al.17 evaluated two acid hydrolysis processes using hardwood chips and corn stover to produce ethanol and other chemicals. The base-case commercial design was for producing approximately 42 million L y1 of ethanol.17 Production costs ranged from $0.45 to $0.50 L1, without byproduct credits. Capital and operating costs approximated 40% and 60%, respectively for the two processes.
2. PROCEDURES

2.1. Model description The values found in the literature and acquired from eld studies were used to develop parameters for the sensitivity analysis model in this study. The review also rearmed the notion that various components of the production system were not adequately tied together. Key variables in the model were not being prioritized for their impact on nal product cost. The review information further contributed to the range of values used in the sensitivity analysis. The general inventory model used in this study has been previously described.1,22,23 The model consisted of three components: (1) a biomass plantation, (2) biomass harvesting and transport, and (3) the manufacturing of an end product. All components contained specic tasks, various types of inventories, and

associated costs. The plantation component was characterized by the availability of the raw material resource, such as standing trees. The harvest component included the harvest method and the transport and storage options for raw materials. The manufacturing component incorporated (1) the process for converting raw materials into a nal product and (2) the subsequent storage or sale of these nal products. While each component was the impetus for a particular inventory, there was a considerable overlap of inventories within each unit. For example, standing trees, harvested raw materials, and liquid fuel inventories could all coexist within the same time period. Certain assumptions and parameters were associated with the general inventory control model. The model was capable of handling up to three dierent raw material or feedstock types (e.g., woody biomass, agricultural crops, fossil fuels) within a system subject to a multiechelon demand pattern throughout the year. The rst demand echelon described the raw material requirements, which were a direct result of the processing capacity of the manufacturing facility, and could be constrained to any amount for a given time frame. The processing of on-hand raw material inventories was on a rst in, rst out (FIFO) basis. All inventories were subject to a periodic review in which the order quantities varied while the interval between reviews remained constant. When raw material replenishments were required, there was an immediate entry (no leadtime) into the system at the beginning of a time period. However, replenishment opportunities were seasonal within the annual cycle due to harvesting constraints. The second demand echelon reected the market demand for the end product. Eventually, the nal product left the system from one period to another according to a variable market demand pattern. All demands were uniform or constant within a given time period. The time periods in the model were programmed as months of the year. The harvest window was set at six months for this study. In general, inventory models are characterized by the type of demand schedule. A deterministic dynamic programming (DP) procedure is often used when the demand for an item is deterministic (known with a high degree of certainty).24 In the current model, although the raw material demand was held

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S. C. GRADO and M. J. CHANDRA Table 2. Cost inputs for the general model (1997 U.S. dollars) Components Plantation Establishment Maintenance Harvest Harvest/chipb Transportb Storage Wood chips Corn Substitute raw material Penalty Harvest and deterioration loss Manufacturing Processing Raw material Corn Substitute raw material Storage ethanol Penalty Market loss
a b c

constant, the demand for the nal product was both deterministic and dynamic. The term dynamic implies a demand that, though known with certainty, is variable from one time period to another.24 While this programming approach ignored the element of risk in the inventory model, it permitted a consideration of seasonal trends in demand which cannot be computed in a probabilistic model.24 Unique to the model was the handling of shortage costs in production. Shortage costs traditionally relate to shortfalls or ``lost sales'' resulting from the nal product and market demand. Ghare and Schrader25 used penalty costs to represent the loss of sales and goodwill for any time that a product was out of stock. Using ``lost sales'' to represent a system cost is a technique often used in economic inventory models.24,2628 However, shortages can be incurred during the input or production phase of an operation. ``Lost sales'' associated with feedstock inputs were unique to this study and were used to gauge the eciency of operations associated with raw material proTable 1. Parameter inputs for the general model Components Plantation Establishment Land area Rotation Yield Harvest Harvester Window Capacity Utilization Transport Van capacity Roundtrip Storage Raw material Method Units Parameters

Units $ Mg1(OD) $ Mg1(OD) $ Mg1(OD) $ Mg1(OD) $ Mg1(OD) mo1 $ bu1 mo1 $ Mg1(OD) mo1 $ L1

Costsa 3.64 17.01 16.46 9.77 3.19 0.02 3.19

$ L1 $ L1 $ L1 $ L1 mo1 $ L1

0.25 0.32 0.25 0.01

d

All costs for woody biomass unless otherwise stated. Does not account for material losses. Equals the selling price minus the cost of processing. d Equals the selling price minus the cost of the raw materials and processing.

ha y Mg(OD) ha1 mo h ha1 % Mg (Green) km Wood chips Conical piles

1503 6 73.8 6 3.72 100 24.5 80 Hardwood Uncovered, outdoor Unlimited 1.0

Area ha Decay ratea % mo1 Manufacturing Equipment capabilityb Raw material Mg(OD) mo1 10,000 351,590 Corn bu mo1 1 Substitute raw Mg(OD) mo 10,000 material Conversion rate 346.00 Wood L Mg1(OD) Corn L bu1 9.84 Ethanol storage area L mo1 Unlimited 37.85 Demand megalitres y1
a b

curement. The model incorporated a penalty cost for each missed opportunity attributed to the input and/or the output. For shortages due to harvesting ineciencies and storage deterioration, a penalty cost was used that expressed the dierence between the selling price of a litre minus the cost of processing. For shortages related to the output, the loss of nal product sales (excluding harvest and deterioration losses) was expressed as the selling price per litre minus the total production cost. Since demands in the system were not backlogged, the model would sustain a penalty cost for ``lost sales'' above and beyond harvest and storage deciencies. This is known as the unsatised demand cost. The increased cost of purchasing raw materials from outside the supply system may be oset by an increase in output and subsequent decrease in ``lost sales''. The general model parameters and costs for woody biomass (six-year rotation) and ethanol production are located in Tables 1 and 2. 2.2. Sensitivity analysis Sensitivity analysis was used to identify and assess those factors having the greatest inu-

Percentage of an inventory per month in storage. Capability if only one material is used as a feedstock.

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ence on nal cost for a model solution. Emphasis was placed on inventory functions within the model. The analysis could potentially include specic items such as tree yields, the harvest utilization and capability rate, the inuence of the harvesting window, the raw material deterioration rate, the eect of storage area limitations on the inventories, and the impact of manufacturing capabilities. An analysis based on a factorial design was undertaken to describe relative impacts of various independent variables on the dependent variable of nal cost. For example, the relative impact of decay rates on nal cost could be determined when considering storage deterioration. The procedures used in this study followed those described by Montgomery.29 A standard analysis of variance procedure was not possible, since the dynamic programming runs produced static output solutions (unreplicated factorial) from the model. There is no estimate of error with only one replicate. A factorial design was used to study both the main eect and the joint eects of factors on a model solution. Model runs that included one variable represented the main eects. Multiple variable combinations were called interaction eects. The interaction eects described the portion of a factor's impact that depended on the level of another factor or factors chosen. The solutions from the various input levels and DP runs, recorded as dollars per litre ($ L1), were used to develop the sensitivity analysis. A descriptive analysis of the inuence of each factor and their interactions (input levels) was based on the development of a contrast table. The estimated change in the optimal solution due to the main eects used a standard analysis of variance procedure. This is not a statistical procedure since there is no error term. In many experiments involving an examination of two or more factors, factorial designs

are most ecient.29 The specic factorial design in this study used a special case where there are ``k'' factors described, each at only two levels. Factorial designs (e.g. 2k factorial design) are particularly useful for sensitivity analysis. The independent factors can be either qualitative or quantitative in nature. The two levels of a factor were designated as ``high'' and ``low'' values and excluded the use of extreme points beyond the range for that factor. High and low end points were chosen to depict a feasible range for a particular parameter. An examination of previous woody biomass dependent processing systems helped determine the parameters chosen for the sensitivity analysis.2 The range of values for these inputs were derived from the applicable studies. The factorial design analysis involved the impact of two sets of independent factors on the least cost solution. Previous studies supported using the yield and cost parameters for the six-year rotation of low planting density trees as the basis for the sensitivity analysis.1,22 The rst set of independent factors were: (1) storage deterioration, ``a'', (2) the size of the manufacturing facility, ``b'', and (3) raw materials purchased from outside the system, ``c''. Model parameters and ranges selected are summarized in Table 3. The parameters were analyzed to assess the interaction between the size of the facility on storage deterioration and the impact of transport costs. Storage deterioration rates assumed a reasonable range for hardwood chips.3,4,30 The size of the manufacturing facility was based on the monthly raw material capacity of a mill. Since the outside market demand was set-up for a small to medium size market share, the facility size incorporated a range of sizes for intermediate mills similar to those found in the pulp/paper industry.31 The last parameter permitted the model to purchase outside raw materials transported

Table 3. Model parameters and ranges used for the rst sensitivity analysis Range Input Description (factor) Storage retention (a) Manufacturing facility (b) Outside raw materialc (c)
a b

Units % mo Mg(OD) mo1 $ Mg1(OD)

1

High value 99.00 22,453 $45.67

a

Low value 95.00b 12,474 $50.74

Deterioration rate of 1% per month. Deterioration rate of 5% per month. c Raw material costs when one-way deliveries were increased 100 and 200 km.

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at an additional one-way distance range of 100200 km. A transportation cost dierence occurred between raw materials bought elsewhere and those produced internally. The second sensitivity analysis used ve factors: (1) tree yields, ``a'', (2) harvester capability, ``b'', (3) storage deterioration, ``c'', (4) the size of the manufacturing facility, ``d'', and (5) the conversion eciency of a process that turns raw materials into an end product, ``e''. The model parameters and ranges used for this second analysis are listed in Table 4. The yield range was based on an increase of 15% above and below the estimated yield of 73.8 Mg(OD) ha1 for a six-year rotation.2,3 The lower limit of the range fell above the estimated yield for a ve-year rotation, while the upper limit was below the yield for a seven-year rotation. The total available wood from a 1503-hectare unit during the harvest year was approximately 111,000 Mg(OD). The harvester capability was examined over a material retention range of 8595%. These values encompassed a reasonable range supported by the literature on experimental harvesting operations.911 The storage and harvest parameters used the same ranges as the rst sensitivity analysis. The conversion eciency was based on previous research results.21,3234 The theoretical conversion rate for turning poplar into ethanol was 450 L Mg1(OD).32 The likely range for conversion during the fermentation processes was between 300 and 400 L Mg1(OD) for poplars.33 The completed analysis of each study design required 2k observations (a 2k factorial design).29 A replicate entailed all of the main eects (factors) and interactions of factors. A total of 2k dynamic programming runs would be necessary in order to thoroughly examine the impact of the ``k'' parameters in a sensitivity analysis.

A sensitivity analysis was performed on two sets of independent model variables. Both sets of variables were chosen to assess their individual and interaction eects on the optimal solution which was the end product cost. For the rst sensitivity analysis only three parameters were reviewed. This required eight total model runs. In the second sensitivity analysis with ve parameters, a total of 32 dynamic program runs were necessary. However, a design technique called ``confounding'' permitted only 16 runs (called a half replicate) to be completed. Confounding is a design technique for arranging a complete factorial design in blocks, where the block size is smaller than the number of input level combinations in one replicate. Confounding of high-order interactions is recommended for this type of analysis.35 In this procedure higher order interactions are assumed to not exist or to be negligible relative to main eects and low-order interactions.31,35,36 By careful selection into blocks of the factor combinations to be run in the model, the higher order interactions were confounded (indistinguishable) with the main eects. Thus, a total of 16 dynamic programming runs were made to arrive at each optimal cost and schedule, thus simplifying the analysis and saving computation time. It was assumed that higher order interaction eects were insignicant in comparison with the main eects (as often is the case), thus the design allowed us to obtain relatively ``clear'' main eects. The validity and reliability of the results are not sacriced as long as the assumption of negligible higherorder interactions holds true. If the low-level (two-factor and three- factor interactions) are negligible or their eects are negligible, then it is safe to assume that higher-order interactions (four-factor and ve-factor interactions) are not signicant.35

Table 4. Model parameters and ranges used for the second sensitivity analysis Range Input Description(factor) Plantation yields (a) Harvester capabilitya (b) Storage retention (c) Manufacturing facility (d) Conversion eciency (e)
a b

Units Mg(OD) ha % % mo1 Mg(OD) mo1 L Mg1(OD)

1

High value 84.87 95.00 99.00b 22,453 400

Low value 62.73 85.00 95.00c 12,474 300

Represents the amount of material harvested from the site. Deterioration rate of 1% per month. c Deterioration rate of 5% per month.

A biomass to ethanol production system Table 5. Results of the unreplicated three-parameter factorial design Run No. 1 2 3 4 5 6 7 8
a b

121

Input levelsa (1)b a b c ab ac bc abc

$ L1 0.393 0.380 0.399 0.389 0.399 0.377 0.391 0.391

Harvest schedulec (10, (10, (20, (10, (20, (10, (20, (20, 10, 10, 20, 10, 20, 10, 20, 20, 10, 10, 20, 10, 20, 10, 20, 20, 10, 10, 20, 10, 20, 10, 20, 20, 10, 10, 10, 10, 10, 10, 10, 10, 50) 50) 10) 50) 10) 50) 10) 10)

Indicates which parameters are at the high end of their ranges (Table 3). Indicates that in this model run all parameters are at the low end of their ranges. c Described as percent harvest per month.

3. RESULTS AND DISCUSSION

The inventory control model used deterministic dynamic programming to solve for the least cost alternative of a plantation and harvesting strategy aliated with a woody biomass to ethanol manufacturing process.1 The model identied all costs associated with the plantation, harvest, and manufacturing components. The nal cost of ethanol from this system, prior to any sensitivity analysis, was $0.45 L1. Conversion of the feedstock was based on an enzymatic fermentation process.21 3.1. Sensitivity analysis The input levels and designated parameter highlow combinations for the 23 factorial design are listed in Table 5. The results, which include the costs and harvest schedules of the dynamic programming model runs, are also

located in Table 5. In the three-factor design the largest main eects were attributed to factor ``b'' (the size of the manufacturing facility (45.3%)). Factors ``a'' (the storage retention rate) and ``c'' (the purchases of outside raw materials) were 17.4% and 17.6%, respectively. The only interaction eects were factor combination ``ab'' (the interplay between storage retention and the size of the processing facility (17.4%)) and ``bc'' (the interplay between the size of the manufacturing facility and outside raw material purchases (2.3%)). The block input level and designated parameter highlow combinations for the 25 factorial design are listed in Table 6. In the vefactor design the largest main eects were attributed to factor ``e'' (the conversion eciency (44.0%)), factor ``b'' (the harvester capability (36.6%)), and factor ``a'' (the plantation unit yield (8.7%)). The largest

Table 6. Results of the unreplicated ve-parameter factorial design Run No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

a b

Input levelsa (1)b ab ac bc ad bd cd de ae be ce abce abcd abde acde bcde

$ L1 0.627 0.462 0.516 0.519 0.518 0.521 0.602 0.484 0.466 0.413 0.484 0.392 0.425 0.396 0.444 0.393

Harvest schedulec (10, (10, (10, (10, (20, (20, (20, (20, (10, (20, (20, (10, (20, (20, (20, (20, 10, 10, 10, 10, 20, 20, 20, 20, 10, 10, 10, 10, 20, 20, 20, 20, 10, 10, 10, 10, 20, 20, 20, 20, 10, 10, 10, 10, 10, 10, 20, 20, 10, 10, 10, 10, 20, 20, 20, 20, 10, 20, 20, 10, 10, 10, 20, 20, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10, 20, 20, 10, 10, 50) 50) 50) 50) 10) 10) 10) 10) 50) 30) 30) 50) 20) 20) 10) 10)

Indicates which parameters are at the high end of their ranges (Table 4). Indicates that in this model run all parameters are at the low end of their ranges. c Described as percent harvest per month.

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interaction eect was factor combination ``bd'' (the interplay between the harvester capability and conversion facility size (2.6%)). There were no other interaction eects in the analysis. 3.2. Factorial analysis In the three-factorial design, all input levels chosen had an eect on the optimal solution. These factors were analyzed together because high storage deterioration might make alternative feedstocks more eective during certain periods of the year. The size of the manufacturing facility was used as a factor, because in certain instances it could have a potential impact on the nal cost of the product. For example, a large processing facility's demand for feedstocks could force the use of higher priced raw materials from outside the system when shortages occur. A lower demand at the facility could delay the cutting of trees or increase harvested raw material storage times. Smaller facilities that process fewer feedstocks increase raw material storage and ``lost sales'' of the nal product, because demands cannot be met. Among the main factors considered, the size of the manufacturing facility, ``b'', had a marked eect on total cost variability (45.3%). Storage retention, ``a'', and the price of harvested raw materials outside the system to supplement internal feedstocks, ``c'', both had modest eects on nal costs at 17.4% and 17.6%, respectively. The largest interaction eect, at 17.4%, was ``ab'', the interplay between storage retention and the size of the manufacturing facility (Table 7). When storage deterioration was a problem (storage retention of 0.95), machine size did not produce drastically dierent end-product costs. When storage deterioration was not a major problem (storage retention of 0.99), the appropriate facility size did have an impact on inventory costs. In this study the smaller facility size was adequate, because there was enough raw material to meet demand. There was less dependence on alternative feedstocks. The end result
Table 7. The interaction eect between storage retention and facility size Dollars per Litre Storage retention 0.95 0.99 Smaller facility 0.444 0.425 Larger facility 0.441 0.451

was lower production costs per unit of nal product. Also, harvested materials could be processed when needed later in the year. Conversely, the feedstock demands of a larger facility led to greater outside purchasing of raw materials and the overproduction of the end product. The result was higher inventory costs. However, with a larger outside demand for the nal product these inventory buildups would be reduced and a larger facility size would most likely result in a lower cost per unit of nal product. Only three of the factors analyzed in the ve-factorial design had an impact on the variability of the solution outcome (Table 4). The product yield from the biomass input (factor ``e'') was most inuential and accounted for 43.6% of the total variability in nal product cost. This result conrmed ndings in other cost sensitivity studies where conversion yields had a greater impact than other parameters on product costs.16,37 Harvesting equipment capability (factor ``b'') had the next largest eect (32.3%) on the product cost. Despite a reasonably high range of input levels used in the model for this factor it still had a large eect on the optimal solution. The eect of this factor emphasizes the need for research eorts to rene this aspect of the harvest. It is true that the eciency of gathering materials in the harvest/transport phase of this task is only one aspect of the harvest. However, the harvest capability has been largely ignored by other studies or, when considered, displayed a great deal of variation. This sensitivity analysis, on one aspect of the harvest, lends importance to the entire harvesting task. The third largest eect was plantation yield (factor ``a''). It had an 8.7% eect on product cost and previously was identied as inuential in biomass cost studies.38,39 Plantation yield aected the total product cost over the analysis of an entire system in the present study. Storage retention, ``c'', and the size of the manufacturing facility, ``d'' (1.2% and 2.7%, respectively) did not have a large impact on total costs when considered with the above three factors. There were no interaction eects.
4. SUMMARY

The factorial design model covers the entire production system and lends itself to prioritizing key parameters using sensitivity analysis. Additional sensitivity analyses can be per-

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formed by incorporating other potentially signicant parameters with these factors. For example, while facility size and storage retention were important in the rst analysis, they were less so in the second analysis. The focus for research and technological improvements should be on the conversion yields from wood, harvester equipment capabilities, and plantation yields, as indicated in a second analysis of ve factors. Improvements in these factors should be coupled with a realignment of the production system design and implementation. For example, increased plantation yields, coupled with increased harvesting capabilities, result in higher feedstock quantities for conversion. Potentially, there would have to be an increase in manufacturing capacity to compensate otherwise wood chip storage and deterioration may increase. This expansion would be preferential in cases where market demands currently exceed nal product outputs. A key feature of the analyses is the ability to evaluate any parameter or variable combination in the model. The design technique called ``confounding'' helps to minimize the extent of multi-factor design analyses. This is important, because the number of variables under investigation often requires resources beyond the capability of the experimenter.29 Additionally, there is no loss in the reliability of results as long as the assumption of negligible higher order interactions holds true. Since the low-level (two-factor interactions) are negligible or their eects negligible, then it was safe to assume that higher order interactions (three-factor and ve-factor interactions) were not signicant. We have further evidence to justify this assumption, because the analysis shows that the ve four-factors which were not confounded are also not signicant. The eect of dierent factors on nal product costs can be used as a guide for allocating research eorts aimed at lowering costs. In the case of facilities already in operation, this type of analysis can aid in reducing production costs per unit of nal product. Previous to the sensitivity analysis we arrived at an optimal solution for a production system by controlling for inventory costs. This system can be more clearly understood by detecting variables which are most likely to inuence the optimal solution by the way in which they inuence inventory.

Acknowledgements Approved for publication as Journal Article No. FA081-0697 of the Forest and Wildlife Research Center, Mississippi State University.

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