Green supply chain design with emission sensitive demand: second order cone programming formulation and case study

We propose a novel modeling framework for supply chain network design that models a prevailing trend in consumer choice in which demand is impacted by carbon footprint. To date, the literature lacks models that realistically account for and accurately calculate per unit emissions, i.e., carbon footp...

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Bibliographic Details
Published in:Optimization letters Vol. 15; no. 1; pp. 231 - 247
Main Authors: Elhedhli, Samir, Gzara, Fatma, Waltho, Cynthia
Format: Journal Article
Language:English
Published: Berlin/Heidelberg Springer Berlin Heidelberg 01.02.2021
Subjects:
Computational Intelligence
Mathematics
Mathematics and Statistics
Numerical and Computational Physics
Operations Research/Decision Theory
Optimization
Short Communication
Simulation
Green supply chain design
Eco-labels
Carbon footprint
Emission sensitive demand
Second order cone programming
ISSN:1862-4472, 1862-4480
Online Access:Get full text
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Summary:We propose a novel modeling framework for supply chain network design that models a prevailing trend in consumer choice in which demand is impacted by carbon footprint. To date, the literature lacks models that realistically account for and accurately calculate per unit emissions, i.e., carbon footprint. We develop a profit maximizing model that accounts for emissions at the different stages of the supply chain, locates facilities and selects their technology, and decides on the flow between echelons. To calculate the carbon footprint, fixed emissions are averaged over throughput, which results in a nonlinear optimization problem with fractional terms. To solve it, we provide a mixed integer second order cone programming reformulation. We perform extensive testing of the framework on a realistic case study and carry out detailed analysis. The proposed framework succeeds in capturing the trade-off between lost demand due to a high carbon footprint and investing in environmentally-friendly technology. The framework serves as a tool to induce organizations to invest in green technology and to allow regulating authorities to assess the impact of eco-labeling.
ISSN:1862-4472
1862-4480
DOI:10.1007/s11590-020-01631-x