A carbon-sensitive two-echelon-inventory supply chain model with stochastic demand

Rising environmental awareness is a critical factor that sets new standards and defines new practices around the world, impacting all industries and fields, including supply chain management. While traditional supply chains are designed and operated in a way that minimizes costs and increases profitability, this is no longer sufficient. Supply chain design is becoming more and more concerned with meeting the target of substantially reduced emissions, in addition to constantly evolving by integrating decisions across different levels in order to further minimize costs. In light of this, the current paper addresses the joint location-inventory problem and extends it to account for the reduction of carbon emissions. The problem consists of one plant, multiple distributors and multiple retailers, with products flowing from a plant to DCs and from there to retailers. To better reflect real-life circumstances, we also account for uncertainty by including a new variable that represents the probability of different demand scenarios.