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%.
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. Within a global sourcing context, companies experience the need of new decision making approaches capable to consider a large variety of factors, also linked with society and environment. Environmental impact assessment has become a key requirement for materials purchasing and transportation decisions since global warming is a rising concern both in academic and industrial researches. In fact, it is well known that the freight transport industry is responsible for large amounts of carbon emissions contributing to global warming. In this paper, we initially analyse and compare the environmental economic policies established by the International Governments in relation to the carbon trading systems adopted. Then, we develop a multi-objective lot sizing approach useful in practice to define the sustainable quantity to purchase when a Cap and Trade mitigation policy is present. We further analyse the model behaviour according to different carbon price values by demonstrating that carbon prices are still far too low to motivate managers towards sustainable purchasing choices.
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