Non-stationary stochastic inventory lot-sizing with emission and service level constraints in a carbon cap-and-trade system

Arun Kumar Purohit, Ravi Shankar, Prasanta K. Dey, Devendra Choudhary

Research output: Contribution to journalArticle

Abstract

Firms worldwide are taking major initiatives to reduce the carbon footprint of their supply chains in response to the growing governmental and consumer pressures. In real life, these supply chains face stochastic and non-stationary demand but most of the studies on inventory lot-sizing problem with emission concerns consider deterministic demand. In this paper, we study the inventory lot-sizing problem under non-stationary stochastic demand condition with emission and cycle service level constraints considering carbon cap-and-trade regulatory mechanism. Using a mixed integer linear programming model, this paper aims to investigate the effects of emission parameters, product- and system-related features on the supply chain performance through extensive computational experiments to cover general type business settings and not a specific scenario. Results show that cycle service level and demand coefficient of variation have significant impacts on total cost and emission irrespective of level of demand variability while the impact of product's demand pattern is significant only at lower level of demand variability. Finally, results also show that increasing value of carbon price reduces total cost, total emission and total inventory and the scope of emission reduction by increasing carbon price is greater at higher levels of cycle service level and demand coefficient of variation. The analysis of results helps supply chain managers to take right decision in different demand and service level situations.
Original languageEnglish
Pages (from-to)654-661
Number of pages8
JournalJournal of Cleaner Production
Volume113
Early online date19 Nov 2015
DOIs
Publication statusPublished - 1 Feb 2016

Fingerprint

Supply chains
Carbon
carbon
Carbon footprint
Linear programming
Costs
Managers
services
sizing
demand
Cap and trade
Service levels
Lot sizing
carbon footprint
linear programing
cost
Industry
Experiments
Supply chain

Keywords

  • carbon emission
  • lot-sizing
  • non-stationary stochastic demand
  • cycle service level
  • carbon cap-and-trade system

Cite this

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Non-stationary stochastic inventory lot-sizing with emission and service level constraints in a carbon cap-and-trade system. / Kumar Purohit, Arun; Shankar, Ravi; Dey, Prasanta K.; Choudhary, Devendra.

In: Journal of Cleaner Production, Vol. 113, 01.02.2016, p. 654-661.

Research output: Contribution to journalArticle

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