Effects of Sourcing Decisions in a (Q,R) Model under Carbon Trading

Abstract

In this study, we analyze an inventory system subject to stochastic demand with supplier selection under carbon regulations. Particularly, the well-known continuous review inventory control model (i.e., the (Q,R) model) is revisited with order splitting allowed among multiple suppliers under carbon trading regulation. The suppliers have different costs, environmental characteristics, lead times, and supply capacities. We investigate the optimal supplier selection and ordering decisions with single-sourcing and multiple-sourcing strategies. A solution method is discussed for each sourcing strategy. Then, the economic and environmental performance of the optimal inventory control decisions under single- and multiple-sourcing strategies are compared. We discuss that even though single-sourcing cannot outperform multiple-sourcing economically, it is possible that single-sourcing results in better environmental performance, i.e., lower emission generation. A set of numerical examples are presented for comparing the sourcing strategies. Another set of numerical studies demonstrate the efficiency of the heuristic algorithm proposed to solve the model with multiple-sourcing.

Meeting Name

67th Annual Conference and Expo of the Institute of Industrial Engineers 2017 (2017: May 20-23, Pittsburgh, PA)

Department(s)

Engineering Management and Systems Engineering

Research Center/Lab(s)

Intelligent Systems Center

Comments

This study is partially supported by the University of Missouri System Interdisciplinary Intercampus Research Program and the National University Transportation Center at Missouri University of Science and Technology.

Keywords and Phrases

Emission control; Engineers; Environmental management; Heuristic algorithms; Optimization; Particulate emissions; Stochastic control systems; Stochastic systems; Carbon regulations; Economic and environmental performance; Environmental characteristic; Environmental performance; Optimal supplier selections; Sourcing; Sourcing strategies; Supplier selection; Inventory control; Emissions

International Standard Book Number (ISBN)

978-1-5108-4802-3

Document Type

Article - Conference proceedings

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2017 Institute of Industrial Engineers (IIE), All rights reserved.

Publication Date

01 May 2017

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