Coordinating a supply chain with a heterogeneous vehicle fleet under greenhouse gas emissions

• Published date: 09 November 2015
• Pages: 494-516
• Date: 09 November 2015
• DOI: https://doi.org/10.1108/IJLM-09-2013-0107
• Author: Christoph H Glock,Taebok Kim
• Subject Matter: Management science & operations,Logistics

Coordinating a supply chain with

a heterogeneous vehicle fleet

under greenhouse gas emissions

Christoph H. Glock

Technische Universität Darmstadt, Darmstadt, Germany, and

Taebok Kim

Graduate School of Logistics, Incheon National University, Incheon,

Republic of Korea

Abstract

Purpose –This paper studies a supply chain consisting of multiple suppliers and a single buyer.

It considers the case where a set of heterogeneous trucks is used for transporting products, and

develops a mathematical model that coordinates the supply chain. The purpose of this paper is to

minimise the costs of producing and delivering a product as well as carbon emissions resulting from

transportation. In addition, the authors analyse how imposing a tax on carbon emissions impacts the

delivery of products from the suppliers to the buyer.

Design/methodology/approach –It is assumed that heterogeneous vehicles are used for transporting

products, which have different performance and cost attributes. A mathematical model that considers both

operating costs and carbon emissions from transportation is developed. The impact of vehicle attributes on

lot sizing and routing decisions is studied with the help of numerical examples and a sensitivity analysis.

Findings –The analysis shows that considering carbon emissions in coordinating a supply chain

leads to changes in the routing of vehicles. It is further shown that if carbon emissions lead to costs,

routes are changed in such a way that vehicles travel long distances emptyor with a low vehicle load to

reduce fuel consumption and therewith emissions.

Research limitations/implications –Several areas for future work are highlighted. The study of

alternative supply chain structures, for example structures which include logistics service providers, or

the investigation of different functional relationships between vehicle load and emission generation

offer possibilities for extending the model.

Originality/value –The paper is one of the first to study the use of heterogeneous vehicles in an

inventory model of a supply chain, and one of the few supply chain inventory models that consider

ecological aspects.

Keywords Inventory management, Inventory, Supply chain management, Inventory decisions,

Heterogeneous vehicles

Paper type Research paper

1. Introduction

In recent years, there has been a growing interest in the role of the manufacturing and

logistics sectors in achieving global sustainability (e.g. Sarkis, 2001). Many companies

have implemented sustainability initiatives, whose objective typically is to address the

“triple bottom line”of corporate economic, environmental, and social performance

(Elkington, 1997). Sustainability programmes implemented by corporations have been

complemented by legal initiatives, such as the introduction of the European Union

Emission Trading System or CO

2

taxes that are raised in several European countries

(Egenhofer, 2007; Jaber et al., 2013). An example of legal regulations that affect road

The International Journal of

Logistics Management

Vol. 26 No. 3, 2015

pp. 494-516

©Emerald Group Publishing Limited

0957-4093

DOI 10.1108/IJLM-09-2013-0107

Received 25 September 2013

Revised 21 March 2014

2 June 2014

Accepted 12 September 2014

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

The authors are grateful to the anonymous referees for their constructive comments that helped

to improve an earlier version of this paper.

494

IJLM

26,3

transportation are the emission standards for diesel engines implemented by the

European Union (EU), which may result in penalties for vehicles that do not meet given

minimum standards (see Piecyk et al., 2010a). Manufacturing and logistics may impact

the environment in many different ways, for example by producing waste, vibration or

noise (Piecyk et al., 2010a). The generation of greenhouse gas emissions, and especially

carbon dioxide, however, is considered as one of the most serious problems associated

with human economic activities (see, e.g. IPCC, 2007).

In the area of logistics, the transportation of products is a major source of CO

2

emissions. In the UK, for example, the transport sector is responsible for 23 per cent of

the country’s total energy-related emissions (Piecyk et al., 2010b). The European

Environment Agency (2007) estimates that transport in the EU contributes to about

21 per cent of the total greenhouse gas emissions, with road transport being the main

source of these shares. Similar figures were obtained for the USA, where the transport

sector is assumed to contribute to around 28 per cent of national greenhouse gas

emissions (Dessouky et al., 2003; Erdogan and Miller-Hooks, 2012).

It is clear that the operating policies implemented in a supply chain are a critical

determinant of the amount of greenhouse gas emissions that results from operations.

For example, if products are shipped too frequently or if low vehicle load factors are

used, higher emissions may results from transportation than necessary (McKinnon and

Edwards, 2010; Emmett and Sood, 2010). Other examples are the production of

defective items or the operation of machines outside of their design production rates,

which may both result in higher energy requirements and, therewith, higher levels of

CO

2

emissions than necessary (Piecyk, 2010; Zanoni et al., 2014a).

The literature discusses different concepts that may support companies in reducing the

amount of CO

2

emissions that result from their operations. Examples include driver

training, incentive systems for employees, or switching to vehicles that use alternative fuels

or that are more fuel-efficient (Eglese and Black, 2010; Emmet and Sood, 2010; McKinnon,

2010; Zarkadoula et al., 2007). Another alternative is the use of advanced planning methods

for supply chain operations that consider environmental measures in optimising logistics

activities, instead of adopting a purely cost-based optimisation approach.

A closer look at the literature shows that prior research on the coordination of

production and consumption in supply chains had a primary focus on the reduction of

operating costs (Glock, 2012; Glock et al., 2014). Only a few works exist that analysed

the environmental impact of operations decisions from a supply chain perspective

(see Section 2). As will be sown in the next section, supply chain models that consider

environmental issues had a major focus on production and inventory management

issues, but neglected the impact transportation processes have on the environment. To

close this research gap, this paper develops a mathematical model of a supply chain

that uses a heterogeneous vehicle fleet for transporting products from multiple

suppliers to a single buyer. The aim of the paper is to coordinate this system by

considering both costs and carbon emissions that result from operations. The objective

is to minimise the costs of producing and delivering a product as well as carbon

emissions resulting from transportation. Subsequently, we analyse how imposing a tax

on carbon emissions impacts the delivery of products from the suppliers to the buyer.

The remainder of the paper is organised as follows. The next section gives an

overview of related publications, and Section 3 describes the problem studied in this

paper. Section 4 develops a mathematical model of a multi-supplier-single-buyer supply

chain. Sections 5 and 6 contain numerical examples and a sensitivity analysis, and

Section 7 concludes the paper.

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