The carbon-constrained EOQ
TL;DR: Analytical support is provided for the notion that it may be possible, via operational adjustments alone, to significantly reduce emissions without significantly increasing cost.
About: This article is published in Operations Research Letters.The article was published on 2013-03-01. It has received 391 citations till now. The article focuses on the topics: Carbon tax.
Citations
More filters
TL;DR: It is shown that firms could effectively reduce their carbon emissions without significantly increasing their costs by making only operational adjustments and by collaborating with other members of their supply chain.
Abstract: Using relatively simple and widely used models, we illustrate how carbon emission concerns could be integrated into operational decision-making with regard to procurement, production, and inventory management. We show how, by associating carbon emission parameters with various decision variables, traditional models can be modified to support decision-making that accounts for both cost and carbon footprint. We examine how the values of these parameters as well as the parameters of regulatory emission control policies affect cost and emissions. We use the models to study the extent to which carbon reduction requirements can be addressed by operational adjustments, as an alternative (or a supplement) to costly investments in carbon-reducing technologies. We also use the models to investigate the impact of collaboration among firms within the same supply chain on their costs and carbon emissions and study the incentives firms might have in seeking such cooperation. We provide a series of insights that highlight the impact of operational decisions on carbon emissions and the importance of operational models in evaluating the impact of different regulatory policies and in assessing the benefits of investments in more carbon efficient technologies. Note to Practitioners-Firms worldwide, responding to the threat of government legislation or to concerns raised by their own consumers or shareholders, are undertaking initiatives to reduce their carbon footprint. It is the conventional thinking that such initiatives will require either capital investments or a switch to more expensive sources of energy or input material. In this paper, we show that firms could effectively reduce their carbon emissions without significantly increasing their costs by making only operational adjustments and by collaborating with other members of their supply chain. We describe optimization models that can be used by firms to support operational decision making and supply chain collaboration, while taking into account carbon emissions. We analyze the effect of different emission regulations, including strict emission caps, taxes on emissions, cap-and-offset, and cap-and-trade, on supply chain management decisions. In particular, we show that the presence of emission regulation can significantly increase the value of supply chain collaboration.
1,007 citations
TL;DR: This paper investigates the impact of emissions taxes on the optimal production and pricing decisions of a manufacturer who could remanufacture its own product using a leader-follower Stackelberg game model, and delineates how emissions taxes can be instituted to realize the inherent economic, environmental and social benefits of remanufacturing.
299 citations
TL;DR: In this paper, a retailer's joint decisions on inventory replenishment and carbon emission reduction investment under three carbon emission regulation policies are analyzed, including carbon cap, tax and cap-and-trade policies.
Abstract: Carbon emission regulation policies have emerged as mechanisms to control firms’ carbon emissions. To meet regulatory requirements, firms can make changes in their production planning decisions or invest in green technologies. In this study, we analyse a retailer’s joint decisions on inventory replenishment and carbon emission reduction investment under three carbon emission regulation policies. Particularly, we extend the economic order quantity model to consider carbon emissions reduction investment availability under carbon cap, tax and cap-and-trade policies. We analytically show that carbon emission reduction investment opportunities, additional to reducing emissions as per regulations, further reduce carbon emissions while reducing costs. We also provide an analytical comparison between various investment opportunities and compare different carbon emission regulation policies in terms of costs and emissions. We document the results of a numerical study to further illustrate the effects of investment...
270 citations
Cites background or methods or result from "The carbon-constrained EOQ"
...The cap can be determined by a government agency and/or the firm’s green goals (Chen, Benjaafar, and Elomri 2013)....
[...]
...The lemma, which will be presented without a proof, follows from Corollary 1 and the expression for E ( Q∗1(0), 0 ) provided in Chen, Benjaafar, and Elomri (2013)....
[...]
...Chen, Benjaafar, and Elomri (2013) study the EOQ model with the cap policy and examine its effects on carbon emissions and costs....
[...]
...Our study is similar to Hua, Cheng, and Wang (2011) and Chen, Benjaafar, and Elomri (2013) in that we also take the perspective of a retailer operating in the EOQ environment and consider the existence of a carbon regulation policy....
[...]
...It is worthwhile to note that, when there is no investment opportunity for carbon emissions reduction, Theorem 1 coincides with the results of Chen, Benjaafar, and Elomri (2013)....
[...]
TL;DR: In this article, the experiences of the largest corporation in the world and those of a start-up company show how companies can profitably reduce greenhouse gas emissions in their supply chains.
229 citations
Cites background from "The carbon-constrained EOQ"
...According to Chen et al. (2011), imposing even a small tax on greenhouse gas emissions will motivate changes in procurement, inventory management, and the size and location of production facilities that significantly reduce emissions....
[...]
TL;DR: In this paper, the authors examined the production lot-sizing issues of a firm under cap-and-trade and carbon tax, respectively, and investigated the impacts of production and regulation parameters on the optimal lot-size and emissions.
192 citations
References
More filters
Book•
24 Jan 2000
TL;DR: In this article, one item with a constant demand rate and time-varying demands is described. But, the model is based on a single item with constant lead times.
Abstract: 1 General Introduction2 Systems and Models3 One Item with a Constant Demand Rate4 Time-Varying Demands5 Several Products and Locations6 Stochastic Demand: One Item with Constant Leadtimes7 Stochastic Leadtimes: The Structure of the Supply System8 Several Items with Stochastic Demands9 Time-Varying, Stochastic Demand: Policy Optimization Bibliography Appendix A: Optimization and Convexity Appendix B: Dynamical Systems Appendix C: Probability and Stochastic Processes Appendix D: Notational Conventions
1,709 citations
"The carbon-constrained EOQ" refers background in this paper
...greater than the increase in cost (for further discussion and related results see [4,7,9])....
[...]
TL;DR: It is shown that firms could effectively reduce their carbon emissions without significantly increasing their costs by making only operational adjustments and by collaborating with other members of their supply chain.
Abstract: Using relatively simple and widely used models, we illustrate how carbon emission concerns could be integrated into operational decision-making with regard to procurement, production, and inventory management. We show how, by associating carbon emission parameters with various decision variables, traditional models can be modified to support decision-making that accounts for both cost and carbon footprint. We examine how the values of these parameters as well as the parameters of regulatory emission control policies affect cost and emissions. We use the models to study the extent to which carbon reduction requirements can be addressed by operational adjustments, as an alternative (or a supplement) to costly investments in carbon-reducing technologies. We also use the models to investigate the impact of collaboration among firms within the same supply chain on their costs and carbon emissions and study the incentives firms might have in seeking such cooperation. We provide a series of insights that highlight the impact of operational decisions on carbon emissions and the importance of operational models in evaluating the impact of different regulatory policies and in assessing the benefits of investments in more carbon efficient technologies. Note to Practitioners-Firms worldwide, responding to the threat of government legislation or to concerns raised by their own consumers or shareholders, are undertaking initiatives to reduce their carbon footprint. It is the conventional thinking that such initiatives will require either capital investments or a switch to more expensive sources of energy or input material. In this paper, we show that firms could effectively reduce their carbon emissions without significantly increasing their costs by making only operational adjustments and by collaborating with other members of their supply chain. We describe optimization models that can be used by firms to support operational decision making and supply chain collaboration, while taking into account carbon emissions. We analyze the effect of different emission regulations, including strict emission caps, taxes on emissions, cap-and-offset, and cap-and-trade, on supply chain management decisions. In particular, we show that the presence of emission regulation can significantly increase the value of supply chain collaboration.
1,007 citations
"The carbon-constrained EOQ" refers background in this paper
...Our analysis is in part motivated by a recent paper [1], in which the authors observe that it is possible to significantly reduce carbon emissions without significantly increasing cost by making only operational adjustments....
[...]
...It can also arise in settings where the regulatory agency sets an emission cap but allows the firm to relax its cap through the purchase of emission offsets through third parties (see [1] for examples and references)....
[...]
...Although there is growing literature that is concerned with issues of sustainability in operations (see [1] for a review), papers that explicitly consider emissions are relatively few....
[...]
TL;DR: In this paper, the optimal order quantity was derived and the impacts of carbon trade, carbon price, and carbon cap on order decisions, carbon emissions, and total cost in inventory management.
609 citations
"The carbon-constrained EOQ" refers methods in this paper
...[6] consider a model similar to the cap-and-price model...
[...]
Book•
01 Jan 1991
TL;DR: This monograph aims to describe, and also to demonstrate how to find, rational structures for logistics systems, including their operation and organization, and makes the point that detailed solutions can often be improved if preceded by the kind of exploratory analysis described here.
Abstract: This monograph, viewing logistics systems from an integrated standpoint, aims to describe, and also to demonstrate how to find, rational structures for logistics systems, including their operation and organization. The work departs from traditional operations research procedures in that it avoids detailed descriptions of problems or theiH solutions. For a typical problem, for example, the book demonstrates how to achieve reasonable solutions (described in terms of their properties) based on minimum information and avoiding detailed data handling and complex numerical analyses. The book also makes the point that detailed solutions can often be improved if preceded by the kind of exploratory analysis described here. This monograph on operations research and transportation is intended for researchers.
417 citations
TL;DR: A taxonomy of location problems based on the underlying space in which the problem is embedded is presented and problems from each part of the taxonomy are illustrated with an emphasis on discrete location problems.
Abstract: Facility location models have been applied to problems in the public and private sectors for years. In this article, the author first presents a taxonomy of location problems based on the underlying space in which the problem is embedded. The article illustrates problems from each part of the taxonomy with an emphasis on discrete location problems. Selected recent research in the area is also discussed. © 2008 Wiley Periodicals, Inc. Naval Research Logistics 55: 283-294, 2008
240 citations