Linear Model for Supply Chain Operational Planning and Carbon Footprint Optimization

Supply chain network design attempts to define the best supply chain configuration that enables an organization to maximize its long-term economic performance. Typically, the decisions cover three planning levels (Anthony, 1965; Bertrand, 2003; Fleischmann et al., 2002; Manzini et al., 2008): • Long-term planning (three to five years): Decisions of this level are called strategic decisions and should address how much capacity is needed in each entity, where each part of finished product should be made and in what quantities, how many safety stocks should be formed, how many resources should be bought, and so on. • Mid-term (or tactical) planning (six to twenty-four months): Tactical planning determines an outline of the regular operations, in particular rough quantities and times for the flows and resources enabling the consideration of seasonal trends of demand. Tactical problem types attempt to adopt the most optimal use of the various resources, including manufacturing plants, warehouses, transports, and so on. Using the available flexibility to realize the required performance is the realm of the tactical decision-making process. • Short-term planning (from one to four months): The lowest planning or operational level has to specify all activities in a detailed schedule for immediate execution and Supply chain scheduling strategies historically have emphasized lead time; in almost all cases, energy and environmental factors have not been considered in scheduling. This article presents a new mathematical programming model of the supply chain scheduling problem that considers CO2 emissions and their associated carbon footprint in addition to lead time. To model the problem we chose the job shop theoretical model in which each machine represents a supply chain member and jobs represent the product batches. The new model is demonstrated using a simple case study: a supply chain in which two plants are employed to produce a variety of parts. We illustrate how carbon emissions concerns can be integrated into operational decision making with regards to production and financial flows. The results show that carbon emissions across stages in a supply chain can constitute a significant threat that merits careful attention in the operational planning of supply chains.