Multi-period planning of closed-loop supply chain with carbon policies under uncertainty

Abstract

Climate change and greenhouse gases emissions have caused countries to implement various carbon regulatory mechanisms in some industrial sectors around the globe to curb carbon emissions. One effective method to reduce industry environmental footprint is the use of a closed-loop supply chain (CLSC). The decision concerning the design and planning of an optimal network of the CLSC plays a vital role in determining the total carbon footprint across the supply chain and also the total cost. In this context, this research proposes an optimization model for design and planning a multi-period, multi-product CLSC with carbon footprint consideration under two different uncertainties. The demand and returns uncertainties are considered by means of multiple scenarios and uncertainty of carbon emissions due to supply chain related activities are considered by means of bounded box set and solve using robust optimization approach. The model extends further to investigate the impact of different carbon policies such as including strict carbon cap, carbon tax, carbon cap-and-trade, and carbon offset on the supply chain strategic and operational decisions. The model captures trade-offs that exist among supply chain total cost and carbon emissions. Also, the proposed model optimizes both supply chain total cost and carbon emissions across the supply chain activities. The numerical results reveal some insightful observations with respect to CLSC strategic design decisions and carbon emissions under various carbon policies and at the end we highlighted some managerial insights.