A carbon market sensitive optimization model for integrated forward–reverse logistics

Abstract

Globalized supply chains, volatile energy and material prices, increased carbon regulations and competitive marketing pressure for environmental sustainability are driving supply chain decision makers to reduce carbon emissions. Enterprises face the necessity and the challenge of implementing strategies to reduce their supply chain environmental impact in order to remain competitive. One of the most important strategic issues in this context is the configuration of the logistics network. The decision concerning the design of an optimal network of the supply chain plays a vital role in determining the total carbon footprint across the supply chain and also the total cost. Therefore, the logistics network should be designed in a way that it could reduce both the cost and the carbon footprint across the supply chain. In this context, this research proposes a quantitative optimization model for integrated forward–reverse logistics with carbon-footprint considerations, by integrating the carbon emission into a quantitative operational decision-making model with regard to facility layout decisions. The proposed research incorporates carbon emission parameters with various decision variables and modifies traditional integrated forward/reverse logistics model into decision-making quantitative operational model, minimizing both the total cost and the carbon footprint. The proposed model investigates the extent to which carbon reduction requirements can be addressed under a particular set of parameters such as customer demand, rate of return of products etc., by selecting proper policy as an alternative to the costly investment in carbon-reducing technologies. To solve the quantitative model, this research implements a modified and efficient forest data structure to derive the optimal network configuration, minimizing both the cost and the total carbon footprint of the network. A comparative analysis shows the outperformance of the proposed approach over the conventional Genetic Algorithm (GA) for large problem sizes.