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Sustainability in Material Purchasing: A Multi-Objective Economic Order Quantity Model under Carbon Trading

Author

Listed:
  • Daria Battini

    (Department of Management and Engineering, University of Padova, 36100 Vicenza VI, Italy)

  • Martina Calzavara

    (Department of Management and Engineering, University of Padova, 36100 Vicenza VI, Italy)

  • Ilaria Isolan

    (Department of Management and Engineering, University of Padova, 36100 Vicenza VI, Italy)

  • Fabio Sgarbossa

    (Department of Management and Engineering, University of Padova, 36100 Vicenza VI, Italy)

  • Francesco Zangaro

    (Department of Management and Engineering, University of Padova, 36100 Vicenza VI, Italy)

Abstract

Sustainability in material purchasing is a growing area of research. Goods purchasing decisions strongly affect transportation path flows, vehicle consolidation, inventory levels, and related obsolescence costs. These choices have an economic impact on the supply chain, in terms of different logistic costs, and an environmental impact, in terms of the carbon emissions produced during goods transportation, storage and final recovery. In this paper, we initially analyze and compare the environmental economic policies established by the International Governments in relation to the carbon trading systems adopted. Then, we overcome a traditional single objective formulation, by developing a bi-objective lot-sizing model in which costs and emissions are kept separated and analyzed by using a Pareto frontier subject to a Cap and Trade mitigation policy. The model is useful in practice to support managers in understanding the Pareto frontier shape linked to a specific purchasing problem, defining the cost-optimal and emission-optimal solutions and identifying a sustainable quantity to purchase when a Cap and Trade mitigation policy is present. We further analyze the model behavior according to variation in market carbon price and we finally analytically demonstrate that today carbon prices are still far too low to motivate managers towards sustainable purchasing choices: there is still a gap of about 79%.

Suggested Citation

  • Daria Battini & Martina Calzavara & Ilaria Isolan & Fabio Sgarbossa & Francesco Zangaro, 2018. "Sustainability in Material Purchasing: A Multi-Objective Economic Order Quantity Model under Carbon Trading," Sustainability, MDPI, vol. 10(12), pages 1-15, November.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:12:p:4438-:d:185814
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    References listed on IDEAS

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    Cited by:

    1. Arash Sepehri & Umakanta Mishra & Ming-Lang Tseng & Biswajit Sarkar, 2021. "Joint Pricing and Inventory Model for Deteriorating Items with Maximum Lifetime and Controllable Carbon Emissions under Permissible Delay in Payments," Mathematics, MDPI, vol. 9(5), pages 1-27, February.
    2. Francisco Campuzano-Bolarín & Fulgencio Marín-García & José Andrés Moreno-Nicolás & Marija Bogataj & David Bogataj, 2019. "Supply Chain Risk of Obsolescence at Simultaneous Robust Perturbations," Sustainability, MDPI, vol. 11(19), pages 1-18, October.
    3. Keyong Zhang & Chunxia Li & Jianming Yao, 2019. "Research on Operation and Financing Strategy of an Emission-Dependent Supply Chain under Variable Transportation Fee Strategy," Sustainability, MDPI, vol. 11(16), pages 1-30, August.
    4. Imen Zaabar & Raul Arango-Miranda & Yvan Beauregard & Marc Paquet, 2021. "A Sustainable Multicriteria Decision Framework for Obsolescence Resolution Strategy Selection," Sustainability, MDPI, vol. 13(15), pages 1-16, August.
    5. SungYong Choi & KyungBae Park & Sang-Oh Shim, 2019. "The Optimal Emission Decisions of Sustainable Production with Innovative Baseline Credit Regulations," Sustainability, MDPI, vol. 11(6), pages 1-16, March.

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