Waste Oil Wagon Waste Vegetable Oil Collection Service

1. Waste Oil WagonWaste Vegetable Oil Collection Service Jerry Robock and Josh Levin

2. Our Service • Waste Oil Wagon (WOW) will provide a service to the restaurant and food processing industry by helping to manage the accumulation, storage and disposal of waste oil. • WOW, acting as an intermediary, will deliver this WVO to a biodiesel refinery for conversion into biodiesel motor fuel.

3. The Landscape (Competition) • There are currently national and regional waste removal companies that collect waste food preparation oils for a fee. • These companies typically process this waste oil into intermediate products that are then sold for industrial uses. • In the past this waste oil had some commodity value and waste haulers would either pay the restaurant or food processor for the waste oil or collect it for free. • With the advent of Mad Cow disease, waste oil that contains animal products is no longer suitable in the manufacture of animal feed and the market for the intermediate product, normally called yellow grease, shrank. • Restaurants and waste oil producers now must pay a fee to have their waste oil removed. • In concert, waste haulers have fewer markets for their intermediate product.

4. Strategies • In setting up WOW, there may be initial competition from the current waste oil haulers for this business. • WOW will implement two initial strategies; • start with a very small foot print and • compete on price.

5. Setting up the Day to Day business • The scale of this business must complement the biodiesel refinery capacity. For example, if the target refinery daily capacity is 600 gallons, then the collection service must meet or exceed this level of service. • Components of Service: • Vehicle • recycling containers • temporary storage • scheduling

6. Vehicle • In order to do this, a vehicle is need with either sufficient capacity to make a single run or efficient enough to make multiple runs. • The type of storage that a customer will have will determine the type of vehicle needed. • If the supplier (restaurant or other source of WVO) is provided 55 gallon drums to collect their WVO, a flat bed truck with a lift gate may be most appropriate. • If the supplier refills the 5 gallon jugs the oil came in with waste oil, a pickup truck may suffice. • If a more permanent receptacle exists a vehicle with a pump and storage tank would work best.

7. 55 gallon drum collection

8. Back Alley Storage

9. 55 Gallon Drums

10. Flat bed with lift gate for drums

11. After collecting

12. Bulk collection from bins

13. Pump truck

14. So where’s the money? • At this time most suppliers pay a commercial hauler to remove their waste vegetable oil. These companies typically process the WVO into yellow grease (tallow) and sell it to manufacturers in the cosmetic, pharmaceutical or animal feed industries. They charge a fee from the supplier of WVO and make money selling tallow. WOW will have a similar business model but will charge less to the supplier (or perhaps nothing) and charge the biodiesel refiner for the WVO. The margins should be quite healthy as the WVO will be collected locally and delivered locally.

15. An example • Let’s assume that the biodiesel refinery has a capacity of 600 gallons per day. WOW would have to collect at least this amount each day. • Assuming a restaurant uses 50 gallons of vegetable oil a week, do you service them weekly, bi-weekly, monthly? • If you service them bi-weekly, then each collection would yield 100 gallons. • Therefore, each day you would need to collect waste oil from 6 suppliers to meet the 600 gallon/day refinery capacity. • If you need 6 suppliers per day, you would then need 42 suppliers per week and 84 total suppliers since you are collecting bi-weekly. • How large a geographic area would you need to find 84 suppliers? • Are there more optimal configurations?

16. Basic Capacity Model Using the previous example, demand of 600 gallons/day, your physical plant would scale to 200,000 gallons annually. To supply 600 gallons/day, using the previous assumptions, you would need 148 suppliers with an average weekly production of 50 gallons.

17. Sample Survey Results

18. Questions • Using the previous analysis, the following questions need answers: • Can you efficiently collect from 6 suppliers in a day? • What is the optimal method for collecting 100 gallons at a time? Drum? Pails? Pump out? • From the survey data, there are not 74 WVO suppliers in the Yorktown area. Do you build a smaller plant or venture far and wide? • WVO volumes vary by supplier. Should you exclude small producers and drive farther to include larger ones? • Which comes first, determine the capacity of the plant or the availability of the supply? How do you decide?

19. Collection Analysis

20. Optimization Analysis Given the capacity for Yorktown of 2,200 gallons available, the daily collection time required is only 221 minutes, or less than 3 hours. But, to fulfill the 600 gallons a day, an additional 86 minutes is required, assuming the supply is local. This would be approximately 5 hours/day for collection. Assuming that to collect additional waste oil you would have to travel farther, it is still reasonable to be able to collect 600 gallons/day using one truck and one person and to supply the biodiesel refinery.

21. Further Discussion • If the optimal collection method is using Drums, then no supplier should be collected from unless they have a full drum. Some suppliers would produce less than a full drum in two weeks. Should the collection process be scheduled based on supplier volume rather than a weekly basis? • If a supplier produced 110 gallons a week, then their collection schedule should be weekly. An optimization model is needed to schedule collection based on production such that a drum is collected only when it is full and in such a way as to not use more than one shift to do this.