Vehicle routing analyses with integrated order picking and delivery problem under carbon cap and trade policy

Abstract

PurposeThe purpose of this study is to model a vehicle routing problem with integrated picking and delivery under carbon cap and trade policy. This study also provides sensitivity analyses of carbon cap and price to the total cost.Design/methodology/approachA mixed integer linear programming (MILP) model is formulated to model the vehicle routing with integrated order picking and delivery constraints. The model is then solved by using the CPLEX solver. Carbon footprint is estimated by a fuel consumption function that is dependent on two factors, distance and vehicle speed. The model is analyzed by considering 10 suppliers and 20 customers. The distance and vehicle speed data are generated using simulation with random numbers.FindingsSignificant amount of carbon footprint can be reduced through the adoption of eco-efficient vehicle routing with a marginal increase in total transportation cost. Sensitivity analysis indicates that compared to carbon cap, carbon price has more influence on the total cost.Research limitations/implicationsThe model considers mid-sized problem instances. To analyze large size problems, heuristics and meta-heuristics may be used.Practical implicationsThis study provides an analysis of carbon cap and price model that would assist practitioners and policymakers in formulating their policy in the context of carbon emissions.Originality/valueThis study provides two significant contributions to low carbon supply chain management. First, it provides a vehicle routing model under carbon cap and trade policy. Second, it provides a sensitivity analysis of carbon cap and price in the model.