A Location-Routing-Inventory (LRI) Model in Cold Chain Logistic Considering Carbon Emissions

Abstract

Location-Routing-Inventory (LRI) model is used in logistic chain to select the location of facilities (distribution center, warehouse, or store), the transportation routes between facilities, and the allocation of inventory stored in each facility. This paper proposes developing the LRI model by considering carbon emissions through carbon cap & trade policy, carbon cap policy, and carbon tax policy. Cold chain logistics is a type of logistics chains that keeps perishable products in cold temperatures and produces higher carbon emissions than conventional logistics chain. The development of the LRI model in this paper aims not only to optimize the cost of selecting facility locations, transportation routes, and inventory amount, but also includes optimizing the cost of purchasing raw materials from suppliers under the implementation of carbon emission policies in cold chain logistic. The optimal solution is carried out using LINGO 18.0 and shows that this model can optimize the costs in cold chain logistics by considering carbon emission policies. The results show that the carbon cap policy is the most profitable policy for the company because it produces the lowest total cost compared to other carbon emission policies.