Carbon Market Sensitive Green Supply Chain Network Design

Abstract

This paper introduces a mixed integer mathematical model formulation for the ¿Carbon-Market Sensitive - Green Supply Chain Network Design¿ problem (CMS/GSCND) where carbon trading considerations are integrated within the supply chain network design phase. The solution methodology allows the evaluation of different strategic decisions alternatives, such as supplier and subcontractor selection, product allocation, capacity utilization, and transportation configuration, and their impact in terms of carbon footprint. This new formulation provides decision makers with the ability to understand the trade-offs between total logistics costs and the impact of greenhouse gases reduction. It also allows offsetting the latter through both supply chain reengineering and carbon trading. Model validation, results, and extended analysis are demonstrated via a numerical study.

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