Tactical supply chain planning for tyre remanufacturing considering carbon tax policy

Abstract

Greenhouse gas emissions are receiving greater concern in the world due to the recent Paris climate agreement with announcement of carbon emission targets by various countries to reduce anthropogenic global climate change. Industry and their supply chains are a major source of carbon emissions. Consequently, manufacturing firms have realized the importance of adopting environmental friendly supply chain management (SCM) practices and are implementing such plans in their business operations. The study presents a tyre remanufacturing supply chain tactical planning model that integrates economic and carbon emission objectives with a carbon tax policy consideration. A modified cross-entropy solution method was employed to solve the tyre remanufacturing tactical supply chain planning model with commercial solver. Numerical experiments are completed utilizing data from Indian tyre remanufacturing industry. The analysis of the numerical results give important organizational insights for industry practitioners and policy insights for the government on (1) possible financial and emissions reduction impacts of a carbon tax rate at the tyre remanufacturing supply chain tactical planning level, (2) the use of profit/emission objective trade off analysis for making informed decisions on investments in carbon emission reduction technology, and (3) possible way to decide carbon price for maximum environmental returns achieved without substantial impacts on the economy and competitive positioning of firms. Two carbon saving indices have been proposed for evaluation of carbon scenarios. The results have been analyzed with the help of these indices. A carbon tax and reward policy (CER) has also been proposed.