An Integrated Inventory Model for Distributor - Retailer Considering Transportation, Loading-Unloading, and Carbon Tax

Abstract

This paper proposes an integrated inventory model for a single distributor and a single retailer under stochastic demand and periodic review policy. The implementation of a carbon tax policy aims to reduce emissions from transportation, loading-unloading, and storage activities. To lessen the emissions from the operations, we proposed a model using electric equipment (i.e., truck and forklift) to evaluate the long-term impact of the operation cost and sustainability of the forklift and truck by comparing the electric and diesel equipment. This study utilizes the joint economic lot size (JELS) approach to minimize the joint total cost while taking ecological considerations into account. A proper solution algorithm is developed to find the optimal decision variables (review period, number of shipments, and safety factor), which minimize the joint total cost. The results show that electric equipment can reduce emissions and fossil fuel consumption as well as expenses incurred by both parties.