Multi-retailer joint replenishment problem under different carbon regulation policies

Abstract

ABSTRACT This paper considers a coalition of retailers who are engaged in a horizontal collaboration, pooling their orders for a single item from a mutually shared supplier. Simultaneously, it explores the impact of carbon cap and carbon tax policies on the coalition’s operations. A mathematical model for the carbon cap constrained joint replenishment problem (JRP) is developed along with a computationally efficient solution algorithm. An extensive numerical analysis is conducted to investigate the impact of the carbon cap on the operational and environmental performance of JRP solutions. Several managerial insights are obtained which shed some light on the trade-offs involved upon integrating environmental aspects. The numerical experiments illustrate that by making minor adjustments to their operational strategies, substantial reductions in carbon emissions are achievable. Furthermore, the computational experiments consistently demonstrate the superiority of the carbon cap policy over its carbon tax counterpart. This emphasises the potential for retailers to make environmentally responsible choices without significantly compromising their financial performance.