Modeling low carbon procurement and logistics in supply chain: A key towards sustainable production

Globally increased awareness on carbon emissions forced business firms to optimize their carbon emissions. In a supply chain, carbon emissions are seen right away from the procurement of raw material till the delivery of finished goods. To address and optimize carbon emissions in the procurement and logistics problem, a multi-period, multi-part, multi-supplier and multi-carrier low carbon procurement and logistics model is proposed. The problem is modeled for a carbon trading environment using MILP (Mixed Integer Linear Program). The proposed MILP integrates the procurement and logistics decision in a carbon trading environment of a supply chain. The model considers the carbon emissions caused during ordering, holding and transportation and provides an optimal decision for low carbon procurement and logistics. Proposed MILP is validated through randomly generated deterministic data of four different sets of time varying parameters representing characteristics of procurement and logistics, and is solved with and without the carbon emission constraint. The computational results are encouraging, and significant cost saving is found if the procurement and logistics decisions are taken in carbon trading. To demonstrate the applicability of proposed model, a real case study from a manufacturing industry is also carried out. However, the proposed model is equally applicable to any procurement decisions.