Optimization Research of Supply Chain Considering Defective-rate Items under The Carbon 'Cap-and-Trade' Mechanism

Abstract

Abstract:

Carbon cap-and-trade mechanism is an effective method that takes an advantage of market lever to encourage enterprises to reduce carbon emissions actively. The aims of both cost cutting and carbon emission reduction are considered to support the decisions for company managers. This paper focuses on a supply chain with defective items consisting of one single producer and one single seller, and introduces carbon cap-and-trade mechanism into the research of this supply chain. First of all, the producer's and the seller's carbon emission sources are decomposed respectively, and the total carbon emission in the supply chain is computed. Thus, a total expected cost optimization model with carbon quotas constraints can be obtained. Further, according to three different scenarios faced by managers in decision making: (1) only considering the optimal economic costs; (2) only considering the lowest carbon emissions; (3) considering economic costs and carbon emissions comprehensively, the relationship between optimal order quantities is analyzed. Finally, some conclusions are given to discuss how defective rate, carbon emission quotas and carbon price influence the total expected cost of supply chain, economic order quantity and total expected carbon emissions.

Key words: supply chain, defective-rate, carbon cap-and-trade mechanism, carbon emissions, economic order quantity

Qu Xiaolong, Li Bo, Liu Xuejing. Optimization Research of Supply Chain Considering Defective-rate Items under The Carbon 'Cap-and-Trade' Mechanism[J]. , 2015, 27(9): 187-200.

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