Palm biomass strategic resource managment – A competitive game analysis

• Published in: Energy (Oxford) Vol. 118; pp. 456 - 463
• Main Authors: Tang, J.P., Lam, H.L., Abdul Aziz, M.K., Morad, N.A.
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01-01-2017; Elsevier BV
• Subjects: Biomass; Biomass energy production; Business competition; Case studies; Climatology; Competition; Decision analysis; Game theory; Government policy; Logistics; Nash equilibrium; Optimization; Palm biomass; Plantations; Players; Procurement strategy; Strategy; Supply chain; Supply chains; Vegetable oils; Palm biomass; Supply chain; Competition; Nash equilibrium; Game theory; Procurement strategy
• ISSN: 0360-5442; 1873-6785
• DOI: 10.1016/j.energy.2016.07.163

There are plentiful of palm biomass but these resources are not always being fully utilised. Palm biomass are plentiful; yet their utilization are far from reaching their potential. From the perspective of biomass industry players, especially of the bio-energy industry, there are primarily three factors affecting their business decision: (i) constant and good quality supplies, (ii) process efficiency, (iii) market demand and price. The strategy considerations that respond to these factors are based on other players' competition, plantation output, mill output, logistics matter, government policy and weather. In order to model a real situation in a particular palm plantation area, game theory approach is adopted in analysing and identifying the best strategy for the biomass industry owner. Given that every player tends to act according to their own self-interest for profit maximization, this is thus a non-cooperative game study. The case study in this paper is modelled on two industry players, two oil mills and two plantations. Nash equilibrium is achieved through analysing the best strategy. The strategy selected by the player will lead to the most favorable and positive outcome regardless of whatever decision made by the opponents. In other word, by analysing this scenario using game theory approach, an optimal non-cooperative strategy can be determined. For the future works, it can be applied into the decision support framework for the biomass industry management team.
•Palm biomass supply chain requires immediate procurement decision to cope with the market.•Strategies which respond to opponent's competition will be prioritised.•Best response strategy need to be identified to counteract with competitors decision.•Nash equilibrium in game theory is used to simulate competitive biomass supply case scenario.