Green Supply Chain Network Design Optimization With Multi-Echelon Inventory

With the fast development of population and economy, civilization achievements have been obtained while environment has been seriously damaged. The greenhouse gas emission, among which carbon dioxide emission accounts for a large part, has caused global warming. This phenomenon has heavily affected people's daily life. As one of the important sources of carbon emissions, supply chain should treat emission reduction as one of the important operating goals, realizing a real green supply chain. A reasonable and efficient green supply chain network can not only achieve the optimal allocation of resources of the supply chain network, helping enterprises reduce operating costs and improve competitiveness, but also take full consideration of influence on environment.We study the green supply chain network design problem with multi-echelon inventory management based on some classic theories and methods. We assume that in the warehouse-retailer system, there is only one external supplier and it serves all the warehouses, and each retailer can only be served by one warehouse. Besides, warehouses and retailers both have inventory. We aim to build a supply chain network both economic and environmental, adding cost of carbon emissions into traditional supply chain network design. We show that this problem can be formulated as a set-covering model with its objective to minimize the system-wide cost, including fixed location cost, transportation cost, inventory cost and carbon emission cost. Then we propose column generation method to deal with large numbers of variables and use a new algorithm to solve the pricing problem. Computational results show that our proposed model will open more warehouses than the traditional supply chain design model and with the increase of carbon emission cost, the number of opened warehouses increases; Compared to traditional supply chain network design, our model can effectively reduce carbon emissions and cost, and the cost of traditional supply chain network design model consists of network design cost and carbon emission cost in the constructed network.