One renewable energy form currently being promoted is that of biodiesel as a substitute for diesel fuel. This involves mixing biodiesel with petrodiesel in proportions governed by the respective regulations of each country. The purposes of this research are to support the exploiting of biodiesel forms of renewable energy and to optimize the palm oil-sourced biodiesel supply chain by conducting an Indonesia-based case study. The optimization process was implemented in accordance with the government's mandate and long-term planning. There are two decision variables to consider. First, the model will identify the optimum delivery point locations as a blending terminal between biodiesel and petrodiesel (petroleum diesel). Second, it will determine the location of biodiesel plants’ construction in order to satisfy the government's mandate. The results show that, while determining delivery point locations affects supply chain costs, it does not do so significantly. More influential is determining the construction locations of biodiesel plants and this study provides a model for deciding the delivery points and locations of biodiesel plants in order to minimize biodiesel supply chain costs in Indonesia. This study presents in detail biodiesel supply chain process in Indonesia and based on the literature, no research was found on studying optimization biodiesel supply chain in Indonesia.
