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The Effect of Consumers Bounded “Carbon Behavior” Preference on Location-Routing-Inventory Optimization

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  • School of Business Administration, Northeastern University, Shenyang 110819, China

Received date: 2013-12-04

  Revised date: 2014-12-23

  Online published: 2016-07-27

Abstract

The optimization of supply chain network considering both cost and emissions is a hot topic now. However, the traditional researches mostly focus on the trade-off among economic cost, customer service and others. In this paper, a supply chain network model considering the cost and emissions of location, routing and inventory is designed. Also, the consumer environmental behaviors (CEBs) are incorporated. CEBs not only affect consumers' willingness to pay premium prices for low carbon emission products, but also the overall demand for low carbon emission products. Specifically, it's assumed that the price premium for eco-friendly product is px=x2. Where p is the price of the normal product, px is the price of the eco-friendly products, and θx is the green level coefficient of products. The demand function describes as dx = d+τθx-λpx. Where dx is the demand of the eco-friendly products, d is the initial demand without considering CEBs or a premium for greener products, τ is the consumers' environmental preference for low carbon products, λ is the market inverse demand coefficient. The contributions of this research can be listed as follows. First, a multi-objective model is constructed, which provides a trade-off between costs and carbon emissions. The NNC method is used to solve the model, and then a Pareto optimal set can be obtained. After that, the revenue function based on the Pareto solutions is proposed. In the computational experiments, the model is tested by the data from the Northeast Chemical Sales Company of CNPC. The obtained Pareto optimal curve provides a portfolio of configurations for decision makers. Then, the same technique can be used to obtain the revenue curves from different carbon emissions. Hence, the unique optimal revenue levels and the relevant decisions can be acquired. Finally, the sensitivity of the case study was analyzed. We are interested in the effects of CEBs on the demand and revenue in a three-level supply chain. The results show that more positive CEBs result in greater demand and higher revenue. Also, it's observed that the pricing of low carbon operations is critical. Therefore, enterprises should make marketing efforts to strengthen consumers' environmental preferences. Companies should support their claims to consumers and ensure the degree of CEBs before implementing their carbon emission reduction policies.

Cite this article

TANG Jin-huan, JI Shou-feng, JIANG Li-wen, ZHU Bao-lin . The Effect of Consumers Bounded “Carbon Behavior” Preference on Location-Routing-Inventory Optimization[J]. Chinese Journal of Management Science, 2016 , 24(7) : 110 -119 . DOI: 10.16381/j.cnki.issn1003-207x.2016.07.013

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