Enhanced environmental and economic sustainability of VMI-CS agreement-based closed-loop supply chain for deteriorating products

Abstract

The present study aims to enhance the environmental and economic sustainability of any supply chain, where a single vendor collaborates with multiple buyers following a vendor-managed inventory-based consignment stock policy for deteriorating products. In contrast to the prevailing literature, a distinctive feature of this research is that each and every chain partner invests in green equipment initially, in compliance with the carbon cap-and-trade regulation of the Paris Accord. Incorporating sequential remanufacturing of used products transforms the supply chain into a closed-loop system, significantly diminishing the reliance on fresh raw materials. Albeit traditional, this study classically determines the optimal values of six major decisions that minimize the total cost of the proposed model. In terms of results, the vendor’s sequential production process of new and remanufactured items substantially reduces total cost and raises green investments for all chain partners. This study pleads to employ advanced demand forecasting tools that shall mitigate the impact of fluctuating demand. Also, this study proposes to uphold equitable partnerships between vendors and buyers in any sustainability endeavors, including emissions control. Investing upfront in the efficient collection of used items is a crucial element of sustainability.