The effects of carbon tax on inventory and land multimodal integration

Abstract

Climate change has contributed in extreme weather events recently due to the effect of global warming. One of the main factors is the carbon emissions that have exceeded the permitted limits. Many countries in the world have taken some significant actions by making some commitments to reduce the effect of it. One of the commitments is to give a penalty cost of each unit emissions produced by a country or a company. In this study, we developed an integration model between inventory and multimodal land transportation by focusing on the costs of emissions produced. To distribute products from several suppliers to several customers, we proposed train as long distance transportation mode and truck as short distance transportation mode. The purpose of this study is to find the best solution for total system costs which consists of operational and emissions costs. The numerical experiments show that the carbon tax rate affects the amount of carbon emissions and the total cost. The trade-off between emissions and the costs will produce an optimal solution. The method used in finding the optimal condition is Mixed Integer Linear Programming.