Bilevel Optimization for Capacity Contingency Debottlenecking Considering Trade-Offs within the Waste Oil Supply Chain

A bilevel optimization model is developed to synthesize an optimal waste oil recycling supply chain design in economic and environmental aspects while considering its overall resiliency in addressing major disruptions. In the upper level, optimal re-refineries selection is determined based on the cost and emissions, while the “n-1” contingency is incorporated in the subsequent level to identify the production capacity required for each re-refinery to ensure the functionality of supply chains under disruption. Two regional case studies, comprising the East Malaysia and West Malaysia, are presented to evaluate the effectiveness of the “n-1” contingency strategy. The economic viability of applying “n-1” is different for both cases. Considering a one-month disruption across the asset lifespan, the model anticipates a positive economic gain of 15.79% (in East Malaysia) and 85.71% (in West Malaysia). Nevertheless, applying “n-1” contingency demonstrates better environmental performances in both cases as compared to cases without “n-1”.