Sustainable, multimodal and reliable supply chain design

Abstract

Emerging issues and new challenges of globalization have forced companies to design their supply chains for not only minimizing cost but also considering other factors. Supply chains are exposed to new environmental regulations to reduce their carbon emissions and compelled to consider other overlooked factors, such as risk. In this paper, we consider a multi-echelon multimodal supply chain network design problem with multiple products and components that take economic, environmental and risk factors into account. The problem is modeled as a Mixed Integer Linear Programming model and constrained by a carbon cap-and-trade scheme and a risk threshold. This novel problem realistically portrays the supply chain network design considering sustainability and reliability factors simultaneously. The proposed model has been tested on randomly generated hypothetical but realistic test instances. The impacts of different risk thresholds and unit carbon prices on the supply chain cost, risk and emissions are analyzed. The effects of multimodal transportation modes on cost, risk and emissions are also tested. Results prove that using multimodal transportation decreases supply chain cost and carbon emission. In addition, the total supply chain cost and carbon emission increase if the decision maker is risk-averse. The choice of transportation modes is sensitive only to emission levels.