A Joint Inventory-Location Model with CO₂ Emission Taken into Account in Design of a Green Supply Chain

Abstract

This chapter develops a green supply chain design model that incorporates the cost of carbon emissions into the objective function. The goal of the model is to simultaneously minimize logistics costs and the environmental cost of CO₂ emissions by strategically locating warehouses within the distribution network. A multi-echelon joint inventory-location model that simultaneously determines the location of warehouses and inventory policies at the warehouses and retailers is developed. The supply chain design model also integrates published experimental data to derive nonlinear concave expressions relating vehicle weight to CO₂ emissions as a transportation costs. The objective function determines the number of warehouses to establish, their location, the sets of retailers that are assigned to each warehouse, and the size and timing of orders for each facility to minimize the sum of inventory, shipping (including the CO₂ emissions effect), ordering, and location costs, while satisfying end-customer demand. The developed model is Mixed Integer Nonlinear model solved by using CONOPT solver in GAMS.