A carbon footprint based reverse logistics network design model

Abstract

Due to the environmental legislation and regulations, manufacturing firms have realized the importance of adopting environmental friendly supply chain management (SCM) practices. In this paper, a mixed integer linear model is developed for a carbon footprint based reverse logistics network design. The proposed model aims at minimizing climate change (specifically, the CO₂ footprint), and it employs reverse logistics activities to recover used products, hence combining the location/transportation decision problem. The proposed model is validated by examining a case study from the plastic sector.

Introduction

With the increasing environmental concern, resource reduction, depleting landfill capacities in many countries and enacted obligations by governments to take back the end-of-life products, issues like reverse logistics, product recovery, remanufacturing, and reusing have received growing attention (Demirel and Gökçen, 2008). Implementation of reverse logistics would allow not only for cost savings in inventory carrying, transportation, and waste disposal, but also for the improvement of customer loyalty and future sales (Kannan, 2009, Lee et al., 2009).

Because public awareness of climate change has grown in recent years, so have the expectations for business and industry to have proactive policies and action plans in place. Even those businesses that have been acknowledged as environmental leaders are finding that yesterday's actions are no longer sufficient (Higgs et al., 2009). Take-back and recovery obligations have been enacted or are underway for a number of product categories including electronic equipment in the European Union and in Japan, cars in the European Union and in Taiwan, and packaging material in Germany. At the same time, companies are recognizing opportunities for combining environmental stewardship with plain financial benefits, brought about by production cost savings and access to new market segments (Fleischmann, 2000). For a more detailed discussion of the reasons why companies engage in reverse logistics, which include economic, marketing, legislative, and protection of assets, see Fleischmann (2000). In addition, Sasikumar and Kannan, 2008a, Sasikumar and Kannan, 2008b, Sasikumar and Kannan, 2009 and Pakharel and Mutha (2009) provide detailed reviews on reverse supply chain mechanisms with respect to issues such as end-of-life product recovery and inventory management. For a detailed review on reverse supply chain with respect to issues such as end-of-life product recovery and inventory management see Sasikumar and Kannan, 2008a, Sasikumar and Kannan, 2008b, Sasikumar and Kannan, 2009 and Pokharel and Mutha, 2009.