Product disposal penalty: Analysing carbon sensitive sustainable supply chains

Abstract

The performance evaluation of sustainable supply chain considering economic, environment, and social performances is considered in this paper. We propose a mixed integer linear programming formulation for a closed loop supply chain (CLSC) which operates under carbon cap and trading, material recovery and reuse, and disposal penalty. Environmental sustainability considering carbon emission and the social sustainability considering reusability are the important features of the proposed model. In a forward supply chain (FSC), the recoverability and reusability aspects are absent. The integration of backward supply chain to FSC leads to total costs becoming higher; as a result the integration is not deliberated as a good alternative. Employing the proposed model, the effect of economic, environmental and social costs on both FSC and CLSC are analysed for a single period. We found that the CLSC is economical as well as sustainable if an appropriate level of penalty is imposed for not recovering the material for reuse. The sustainability of the supply chain depends on the collection of post consumed goods (PCG) from the customer zones and the subsequent recovery of materials. An index is proposed to reflect the sustainability of the supply chain. The penalty cost is an important aspect for implementing ‘extended producer responsibility’ (EPR). If organisations do not adhere to EPR scheme, government/controlling agency can levy a tax (penalty) to ensure collection of PCG for recycling and reuse. The proposed model helps to determine such a penalty cost. We also applied CLSC model to a real-life blood bag supply chain to validate its performance.