The Integration of Environmental Foot-Printing Strategies to the Capacitated Warehouse Location Problem with Risk Pooling

In recent decades, academic and corporate interest in sustainable supply chain management has increased substantially due to international levitation efforts toward minimizing the greenhouse gas emissions. These international determinations to combat climate change have encouraged countries to put mechanisms in place ranging from taxes, permits and voluntary incentives to required regulatory policies, which have created a challenge for companies of all sizes when it comes to managing their supply chain. To establish the field further, this research aims to integrate environmental foot-printing strategies to efficient supply chain design. This can be done using a two-fold approach. The first is to consider the closed-loop supply chain theory in designing the supply chain and the second is to incorporate carbon trading schema into the costs aspects of the design. To manage a supply chain that is not only efficient, but encourages sustainability we propose a capacitated warehouse location problem with risk pooling (CLMRP), which experiences stochastic demand for a single product, to be the backbone for our closed-loop model with carbon trading schema. This green tactical-operational level scheme is formulated as a mixed integer nonlinear mathematical program and solved using the General Algebraic Modeling System (GAMS). The computational results and the sensitivity analysis are provided to verify our design.