Economic and Environmental Implications of Sourcing Decisions in Supply Networks


In this paper, we study a three-echelon supply chain consisting of suppliers, distribution centers, and retailers with environmental considerations. In particular, we investigate how sourcing strategies at the retailer level affect the chain's economic as well as environmental performance (measured by CO2emissions). First, we mathematically formulate the distribution decisions among the different echelons of the chain with a given sourcing strategy. Then, we demonstrate the effects of the sourcing decisions through a numerical study. The results of the numerical study show that as the number of potential supply sources for the retailers, i.e., the number of sourcing distribution centers, increases, the environmental performance of the best economic distribution policy might improve or worsen. Similarly, as the sourcing decisions change, the economic performance of the best environmental distribution policy might improve or worsen. As companies are becoming increasingly concerned with sustainability of their operations, the model we present in this paper can assist in devising not only cost-effective but also environmentally efficient distribution systems.

Meeting Name

2016 Industrial and Systems Engineering Research Conference, ISERC 2016 (2016: May 21-24, Anaheim, CA)


Engineering Management and Systems Engineering

Keywords and Phrases

Distribution; Sourcing; Supply chain management; Sustainability

Document Type

Article - Conference proceedings

Document Version


File Type





© 2020 Institute of Industrial Engineers (IIE), All rights reserved.

Publication Date

01 May 2020

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