Application of North West Corner, least cost and Vogel’s approximation method for optimizing transportation cost of biodiesel between biofuel company and blending terminal

National Biodiesel Development Strategy faces a dilemma due to the trade-off between the percentage of Fatty Acid Methyl Ester (FAME) in the biodiesel mixture and the total subsidy or incentive that must be paid by the government. The incentive for FAME is calculated based on the difference between biodiesel Market Index Price (HIP) and fossil-based diesel fuels HIP in addition to the transportation cost. Therefore, it is important to minimize the FAME transportation cost in Indonesia. This rese arch is focused to define the optimum combination of supply and demand on the distribution of FAME from biofuel company to the blending terminal to achieve the minimum transportation cost using the transportation method. The result shows that through the North West Corner (NWC), Least Cost, and Vogel's Approximation (VAM) Method, the FAME transportation cost can be reduced by 31,05%.