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Tactical supply chain planning under a carbon tax policy scheme: A case study

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  • Fahimnia, Behnam
  • Sarkis, Joseph
  • Choudhary, Alok
  • Eshragh, Ali

Abstract

Greenhouse gas emissions are receiving greater scrutiny in many countries due to international forces to reduce anthropogenic global climate change. Industry and their supply chains represent a major source of these emissions. This paper presents a tactical supply chain planning model that integrates economic and carbon emission objectives under a carbon tax policy scheme. A modified Cross-Entropy solution method is adopted to solve the proposed nonlinear supply chain planning model. Numerical experiments are completed utilizing data from an actual organization in Australia where a carbon tax is in operation. The analyses of the numerical results provide important organizational and policy insights on (1) the financial and emissions reduction impacts of a carbon tax at the tactical planning level, (2) the use of cost/emission tradeoff analysis for making informed decisions on investments, (3) the way to price carbon for maximum environmental returns per dollar increase in supply chain cost.

Suggested Citation

  • Fahimnia, Behnam & Sarkis, Joseph & Choudhary, Alok & Eshragh, Ali, 2015. "Tactical supply chain planning under a carbon tax policy scheme: A case study," International Journal of Production Economics, Elsevier, vol. 164(C), pages 206-215.
    • Handle: RePEc:eee:proeco:v:164:y:2015:i:c:p:206-215
    DOI: 10.1016/j.ijpe.2014.12.015
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