Effects of carbon emission reduction on supply chain coordination with vendor-managed deteriorating product inventory

Qingguo Bai, Gong, Yeming (Yale), Mingzhou Jin and Xianhao Xu

International Journal of Production Economics, 2019, vol. 208, issue C, 83-99

Abstract: While many supply chains use vendor-managed inventory (VMI) to handle deteriorating products, they employ special facilities (e.g., cold warehouses), which produce significant carbon emissions. This new operational practice motivates us to investigate the effects of carbon emission reduction on a supply chain with one manufacturer and two competing retailers for deteriorating products under VMI, which has not been fully studied in the existing literature. Carbon cap-and-trade regulation and investment in green technologies are used to curb carbon emissions generated by production and inventory holding in this system. To bench mark the performance of the decentralized system, an optimization model for the centralized system is formulated to show that there exists an upper bound on the profit penalty for decentralization and the carbon emissions of the centralized system may be lower than those of the decentralized system. A revenue-sharing contract is then proposed to improve the profit and emissions of the decentralized system. The results show that the supply chain can be coordinated perfectly when the demand depends on the manufacturer's green technology level and two competing retailers' selling prices. Numerical examples with sensitivity analysis are further provided to test the robustness of the supply chain's operational decisions.

Keywords: Supply chain management; Carbon emissions; Green technology; Deteriorating product; VMI (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S092552731830447X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:208:y:2019:i:c:p:83-99

DOI: 10.1016/j.ijpe.2018.11.008

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().