Abstract
The proposed study presents an economic lot size and production rate model for a single vendor and a single buyer setup. This model involves greenhouse gas (GHG) emissions from industrial sources. The carbon emissions in this model are considered as two types: direct emissions and indirect emissions. The production rate affects carbon emissions generation in production, i.e., generally, higher production rates result in more emissions, which is governable in many real-life cases. The production rate also impacts the process reliability and quality. Faster production deteriorates the production system quickly, leading to machine failure and defective items. Such reliability and quality problems increase energy consumptions and supply chain (SC) costs. This paper formulates a vendor-buyer SC model that tackles these issues. It considers two decision-making policies: integrated or centralized as well as decentralized, where the aim is to obtain the optimal values of the decision variables that give the minimum total SC cost. It includes the costs of setup, holding inventory, carbon emissions, order processing, production, reworking, and inspection processes. The decision variables are the production rate, lead time, order quantity, the number of shipments, and the investments for setup cost reduction. In the later sections, this paper compares the numerical outcomes of the two centralized and decentralized policies. It also provides sensitivity analysis and useful insights on the economic and environmental execution of the SC.
Highlights
Chain management (SCM) is defined by the Council of Supply Chain ManagementProfessionals (CSCMP) (2004) as “the planning and management of all activities involved in sourcing and procurement, manufacturing processes, and all logistics management activities, including coordination and collaboration with suppliers, intermediaries, and customers” [1]
In contrast to the existing literature, the production rate was studied as a decision variable, and a random number of defective items was utilized to make the production process more flexible
The lead time was reduced with the help of extra costs, and a discrete investment was made to control the setup cost
Summary
Chain management (SCM) is defined by the Council of Supply Chain Management. Professionals (CSCMP) (2004) as “the planning and management of all activities involved in sourcing and procurement, manufacturing processes, and all logistics management activities, including coordination and collaboration with suppliers, intermediaries, and customers” [1]. Wangsa [16] analyzed the vendor-buyer SC model using incentive and penalty policy to cut down the amount of carbon emissions They considered the direct and indirect sources of emissions for the production process under partial backordering and normally distributed buyer’s demand. Marchi et al [26] studied environmental impacts in a two-level SC model with different coordination policies They analyzed the optimal production rates concerning the amount of emissions produced and process quality. No one has considered a model for a vendor-buyer SC system with consideration of a service level, unknown lead time demand distribution and an optimal production rate and cost along with discrete investment for setup cost reduction for the vendor and the carbon emission from the manufacturing process in terms of direct and indirect emissions. SCM: Supply chain management; NA: Not applicable to the study
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