A Multiperiod Supply Chain Network Design Considering Carbon Emissions

Abstract

This paper introduces a mixed integer linear programming formulation for modeling and solving a multiperiod one-stage supply chain distribution network design problem. The model is aimed to minimize two objectives, the total supply chain cost and the greenhouse gas emissions generated mainly by transportation and warehousing operations. The demand forecast is known for the planning horizon and shortage of demand is allowed at a penalty cost. This scenario must satisfy a minimum service level. Two carbon emission regulatory policies are investigated, the tax or carbon credit and the carbon emission cap. Computational experiments are performed to analyze the trade-offs between the total cost of the supply chain, the carbon emission quantity, and both carbon emission regulatory policies. Results demonstrate that for a certain range the carbon credit price incentivizes the reduction of carbon emissions to the environment. On the other hand, modifying the carbon emission cap inside a certain range could lead to significant reductions of carbon emission while not significantly compromising the total cost of the supply chain.