The Inventory Pollution-Routing Problem Under Uncertainty

Abstract

Carbon emissions from supply chain operations are extensively contributing to the global warming. Sustainable supply chain management literature has seen more emphasis on greening of production operations and designing of greener supply networks, considering transportation emissions as “necessary evil”. This chapter aims to investigate the economic and environmental consequences of transport routing decisions in a supply chain with vertical collaboration, for instance through Vendor Managed Inventory. An optimization model and solution method is presented for an Inventory Pollution-Routing Problem (IPRP) in which inventory and transportation costs and emissions as well as demand uncertainty concerns are explicitly incorporated. The proposed model can be used to explore possible tradeoffs between emissions costs and operational costs for green inventory routing decision making. A set of computational tests are designed for performance benchmark of the proposed model and solution method.