Optimizing the Supply Chain for Cost and Carbon Footprint

Project summary:

This research project seeks to develop supply chain models that account for the need to minimize or restrict carbon emissions while also minimizing cost or maximizing profit. The models will account for carbon emissions at several levels: (1) single operation models (e.g., inventory models) at a single firm; (2) inter-functional models that integrate a range of operational models (e.g., location, transportation, sourcing, and inventory decisions) across the supply chain at a single firm; and (3) inter-company inter-functional models that account for the interaction between firms within the supply chain. The models developed will be multi-objective, allowing planners to explore the tradeoffs between cost and carbon footprint. They will allow the examination of carbon emissions across the entire spectrum of supply chain activities in which a firm engages, contrasting with current practice which tends to focus on carbon emissions in single operations (e.g., transportation but not inventory or production). The models will also account for collaboration across the supply chain to reduce emissions and will capture the interactions between firms within the same supply chain, as decisions made by one firm can significantly impact both the cost and carbon footprint at other firms. The models will be used to investigate schemes that allocate carbon footprint, and associated cost, among member firms of the supply chain, recognizing the differential capabilities of firms to meet emission standards. They will also be used to investigate the impact of different regulatory policies, including cap-and-trade, carbon taxing, and carbon offsetting, on supply chain performance. The goals of this research project are to: (1) enhance our understanding of key tradeoffs between costs and emissions; (2) contribute to our ability to reduce carbon emissions across a range of supply chains; (3) identify coordination mechanisms and incentives systems under which firms voluntarily choose to collaborate with other firms on carbon emission reductions; and (4) explore the efficacy of various regulatory policies and support the implementation of policies that reduce emissions, while mitigating the impact on supply chain performance.