Analyzing the Impact of Carbon Regulatory Mechanisms on Supply Chain Management
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2014-07-01
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TRIS Online Accession Number:01554288
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Abstract:The objective of this research is developing a toolset for designing and managing cost efficient and environmentally friendly supply chains for perishable products. The models we propose minimize transportation and inventory holding costs in the supply chain, while accounting for carbon emissions due to transportation and other activities. These models are extensions of the classical Economic Lot-Sizing (ELS) model. The ELS model identifies an inventory replenishment schedule for a fixed planning horizon with deterministic and time-varying demand. We extended these models to consider the use of multiple modes of transportation. The models support replenishment decisions for perishable products and capture the impact of inventory replenishment decisions on greenhouse gas emissions. We have used the numerical results to analyze the impact of potential carbon emission regulations on replenishment decisions. We anticipate that these models will be used to assess the impacts that potential carbon regulatory policies, such as carbon caps, carbon taxes, carbon cap-and-trade, and carbon offsets have on transportation mode selection decisions and overall emissions levels in the supply chain. The benefits from using these models are twofold. First, policy makers can use these models to evaluate the potential impact on emissions for each regulatory policy. Second, environmentally conscious companies can use these models and the corresponding solution algorithms as sub-modules within their material requirements planning (MRP) systems for requirements planning when multiple modes, multiple products, perishable products, and multiple supplier replenishment options are available.
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